Investors who bought stocks during the COVID-19 market crash in 2020 have generally experienced some big gains in the last two years. But there is no question some big-name stocks performed better than others since the pandemic bottom.
Occidental’s Bumpy Road: One company that has been a great investment in the past two years is oil and gas company Occidental Petroleum Corporation OXY.
Like many other companies, the COVID-19 pandemic crushed Occidental’s business in 2020. In fact, WTI crude oil futures briefly dropped below zero during the worst of the pandemic sell-off as demand plummeted and oil buyers ran out of storage space.
At the beginning of 2020, Occidental shares were trading at $41.63. By the beginning of March, the stock was down to $33.55 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
When the S&P 500 hit its pandemic bottom in March 2020, Occidental shares traded down to $9. Unfortunately, while the S&P 500 bounced from there, the worst was yet to come for Occidental.
On April 20, 2020, WTI crude oil futures contracts fell below zero per barrel for the first time in history, settling at an unprecedented price of negative $37.63. The May WTO contracts expired the next day, and prices quickly bounced back into positive territory.
By early June 2020, Occidental shares were back above $20 before the rebound rally ran out of steam. On October 29, 2020, Occidental hit its 2020 pandemic low of $8.52.
Occidental bounced off those October 2020 lows and the stock quickly became red-hot.
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Occidental In 2022, Beyond: WTI crude oil prices rallied to new post-pandemic highs above $65/bbl in March 2021, and Occidental shares topped $25 in February 2021. Inflation, global energy shortages and the war in Ukraine pushed crude oil prices as high as $130 in March 2022.
Inflation has weighed on many stocks, but it is good news for stocks in the energy sector like Occidental. In the most recent quarter, Occidental reported 79.1% revenue growth and $3.7 billion in net income.
Wall Street legend and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett has been aggressively buying shares of Occidental throughout 2022, helping make it one of the best-performing stocks in the entire S&P 500 through the first nine months of the year. Occidental shares soared as high as $77.13 in August 2022 before softening oil prices at least temporarily halted the rally.
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Occidental shares have pulled back to around $61.73 and WTI prices have retreated to $79.98, but inflation and energy supply shortages drag on.
Investors, who bought Occidental stock the day it hit its 2020 pandemic low and held on, have generated some impressive returns at this point. In fact, $1,000 in Occidental stock bought on Oct. 29, 2020, would be worth about $6,859 today, assuming reinvested dividends.
Looking ahead, analysts are expecting Occidental stock to continue to march higher in the next 12 months. The average price target among the 23 analysts covering the stock is $74, suggesting a 20% upside from current levels.