The energy sector has seen a reversal of fortunes this year following a spectacular 2022. The S&P 500's Energy Select Sector (XLE) is down roughly 10% year-to-date, compared to last year's rise of 57.6%.
Houston-based Occidental Petroleum (OXY), backed by Warren Buffett, has followed a similar trend. The stock has pulled back 8% year-to-date, after rising a whopping 117% last year, making it the best-performing S&P 500 company of 2022.
The stock's move downward creates an opportunity for investors, according to Lee Munson, president and chief investment officer of Portfolio Wealth Advisors. Munson sees Occidental Petroleum as a top-pick value play.
"I love that they have cheap production. I love that this place has half of the Permian Basin in their back pocket," said Munson, referring to the oil-and-gas-producing area located in West Texas.
"The Permian Basin is America's easy oil. It's huge, the fields are nice and rich, and it's easy to extract it," he added.
Munson points out that Occidental Petroleum has proprietary processes related to fracking, which decreases its dependence on oil services companies.
"I think it's a good deal. I think that goes for the energy sector in general. It's beat up," said Munson. He added, "I understand that it did really well, but I think going forward you have to think, how is this going to compound for the next five years? At what valuation? And things start looking attractive."
Berkshire Hathaway's (BRK-A, BRK-B) Warren Buffett has been increasing his position in the stock during pullbacks.
"I'm not going to lie, it's nice to see Grandpa Buffett having a little floor on this and feeling like he's going to step in around that $59 level," Munson said.
Occidental Petroleum has made it a point to prioritize returning money to investors through share buybacks.
During the company's earnings call in May, CEO Vicki Hollub said, "The corporation's capital is going to be invested in a way that fits with the priorities that we've established, one of which and as important as any of the others, is investing in and ourselves, that is the repurchase of shares."
Investors have pulled back on energy-related stocks this year in favor of technology, communication services, and consumer discretionary equities.
The price of oil has been on a downward trend this year amid concerns of a recession and a weaker-than-expected recovery in China.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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