OXY Fell 7.3% In A Day. What To Do Now?
Occidental Petroleum (OXY) stock is down 7.3% in a day. While history suggests price dips recover, there is risk – specific to growth and balance sheet. Consider the following data:
- Size: A $44 Bil company with $27 Bil in revenue currently trading at $44.23.
- Fundamentals: Last 12 month revenue growth of 0.1% and operating margin of 20.1%.
- Liquidity: Has Debt to Equity ratio of 0.55 and Cash to Assets ratio of 0.03
- Valuation: Currently trading at P/E multiple of 18.2 and P/EBIT multiple of 9.2
- Has returned (median) 56% within a year following sharp dips since 2010. See OXY Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for OXY, see Buy or Sell OXY Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and OXY drops another 20-30% to $31 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Occidental Petroleum (OXY) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: OXY engages in oil and gas acquisition, exploration, and development globally, manufactures basic chemicals, and provides midstream services including processing, transportation, storage, and marketing of energy products.
2022 Inflation Shock
- OXY stock fell 33.3% from a high of $32.91 on 25 June 2021 to $21.95 on 20 August 2021 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 October 2021
- Since then, the stock increased to a high of $75.97 on 7 November 2022 , and currently trades at $44.23
| OXY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -33.3% | -25.4% |
| Time to Full Recovery | 49 days | 464 days |
2020 Covid Pandemic
- OXY stock fell 81.2% from a high of $47.26 on 15 January 2020 to $8.88 on 28 October 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 2 March 2022
| OXY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -81.2% | -33.9% |
| Time to Full Recovery | 490 days | 148 days |
2018 Correction
- OXY stock fell 56.2% from a high of $86.15 on 11 June 2018 to $37.76 on 14 November 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
| OXY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -56.2% | -19.8% |
| Time to Full Recovery | Not Fully Recovered days | 120 days |
2008 Global Financial Crisis
- OXY stock fell 58.4% from a high of $97.85 on 20 May 2008 to $40.72 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 29 December 2010
| OXY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -58.4% | -56.8% |
| Time to Full Recovery | 769 days | 1480 days |
Worried that OXY could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.