This Warren Buffett stock has generated big gains in recent years and is likely to continue to do so in the future.
Occidental Petroleum (Oxy 1.93%) Occidental Petroleum is one of the largest oil and gas producers in the United States, but its stock price has only skyrocketed in recent years. If you invested $10,000 in Occidental Petroleum three years ago, your investment would be worth roughly $22,500 as of this writing. In other words, this oil and gas stock has more than doubled investors’ money in just three years.
There are certain reasons why Occidental Petroleum’s stock price has risen sharply over the past three years and is likely to continue to rise.
The magic of turnarounds – and Buffett
Occidental Petroleum was burdened with a lot of debt after its big acquisition of Anadarko Petroleum in 2019, and oil prices briefly fell to zero in 2020. The oil and gas giant cut its dividend and its stock price plummeted.
Occidental Petroleum has come a long way since then. The company has aggressively paid down debt, steadily increased its cash flow, and resumed dividend increases in 2021 and has continued to increase its dividend every year since. The company’s rapid turnaround has caught the attention of investors, and its stock price has skyrocketed over the past three years.
Meanwhile, legendary investor Warren Buffett, who was also instrumental in Occidental Petroleum’s acquisition of Anadarko, has become a big buyer of oil and gas stocks.
Buffett’s company Berkshire Hathaway The company began purchasing shares in Occidental Petroleum in 2022. As of March 31, 2024, the company increased its stake in the oil and gas company to 28.2%. Currently, Occidental Petroleum is one of Berkshire Hathaway’s largest holdings.
Buy and hold Occidental Petroleum stock
Of course, Buffett’s backing is a big part of Occidental Petroleum’s stock price surge, but the company is one of the most diversified energy companies in the U.S., with upstream, midstream, chemical and low-carbon ventures and an eye on growth.
Occidental Petroleum is buying privately held Crown Rock for $12 billion to expand in the Permian Basin, after which the company plans to further reduce debt and resume share buybacks, which could fuel the next bull market for oil and gas stocks.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool owns shares in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
