Buy-recommended Occidental Petroleum (OXY) offers unlevered appreciation potential of 26% to estimated net present value of $77 a share, revised up with long-term oil price from $69 a share on May 29.
Second quarter results reported on July 24 trace a rising trend in unlevered cash flow (Ebitda) connected primarily to crude oil price. NPV for the large cap stock is concentrated 78% on oil and NPV looks low compared to our estimates for some thirty other producers.
As a result, Oxy stock may be a prime beneficiary should world oil production fail to meet peak volumes projected for next winter by the U.S. Energy Information Administration and the consuming governments’ International Energy Agency. Regardless, the trend in long-term oil price appears to be up despite volatility of short-term quotes. Finally, OXY stock also has positive momentum as it trades above its 200-day average.
Via: SeekingAlpha
