Time to Buy Occidental ETFs After Buffett's Continued Bullishness?
Warren Buffett has been showing strong bullishness over the integrated oil and gas company Occidental Petroleum OXY. He has been buying shares of the energy company since the beginning of 2022. As the global banking crisis and the resultant global growth worries weighed on oil prices recently, Buffett’s Berkshire bought the dip in Occidental Petroleum.
According to the filing, Berkshire paid about $466.68 million for 7.9 million Occidental shares between March 13 and March 15, as quoted on Benzinga. Earlier this month, Berkshire Hathaway restarted its buying of Occidental Petroleum shares after a break of five months.
Berkshire Hathaway purchased more than 5.8 million shares of Occidental Petroleum between March 3 and March 7, being the first purchase of Occidental shares disclosed by Berkshire Hathaway after Sept 2022, according to a Reuters report that put the Buffett-owned firm's current stake in the company at 22.2%, the Benzinga article noted. Berkshire Hathaway's company now owns about 208.04 million Occidental shares.
Notably, United States Oil Fund LP USO is off about 12% past month and Occidental Petroleum has lost about 9.1% past month (as of Mar 16, 2023). This has encouraged Buffett’s company to scoop up those shares at cheaper valuation.
Occidental Has a Bullish Outlook
OXY has a Zacks Rank #3 (Hold) with upbeat industry rank. The stock has an upbeat VGM (Value-Growth-Momentum) score of B.
What Do Indicators Say About Occidental’ Valuations?
Going by valuation metrics, P/E (ttm) of OXY is 6.3 times versus the industry-average of 5.0 times. Forward P/E of OXY is 9.3 times versus the industry score of 6.2 times. Though these measures point to the higher valuation of Occidental than the industry, a higher P/E is always not a sign of worry. It shows investors’ confidence in a particular stock among the bunch.
Investors should note that return-on-equity of Occidental is 52.7%, higher than industry average of 33.3%. The estimated 3-5-year EPS growth of Occidental is now 22.0% versus 11.1% of the industry measure.
ETFs to Tap
To tap Buffett’s optimism associated with Occidental Petroleum, investors can play Occidental-heavy ETFs as the basket approach reduces company-specific risks.
First Trust Nasdaq Oil & Gas ETF FTXN – OXY has 6.61% Weight
Pacer US Cash Cows Growth ETF BUL – OXY has 4.94% Weight
Invesco S&P 500 Equal Weight Energy ETF RYE – OXY has 4.29% Weight
Roundhill MEME ETF MEME – OXY has 4.27% Weight
First Trust Natural Gas ETF FCG – OXY has 3.72% Weight
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Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
United States Oil ETF (USO): ETF Research Reports
First Trust Natural Gas ETF (FCG): ETF Research Reports
Invesco S&P 500 Equal Weight Energy ETF (RYE): ETF Research Reports
First Trust NASDAQ Oil & Gas ETF (FTXN): ETF Research Reports
Pacer US Cash Cows Growth ETF (BUL): ETF Research Reports
Roundhill MEME ETF (MEME): ETF Research Reports
