Occidental Petroleum Corp (OXY)

[Timothy Smith]

OXY has shown improving profitability over the years and is expected to do so with its presence in the Permian shale and its shift to liquid plays in California.

It is trading at a P/E and P/B ratio of 9.7x and 1.7x, and offers a dividend yield of 2.5%, which is in line with its competitors.

We believe the company is well placed to take advantage of the oil and shale gas boom in the U.S. Therefore, we have a positive outlook on the stock, while oil prices remain a key risk to our thesis.

Investors willing to take a long position or already holding OXY in their portfolio, can hedge their position against a decline in oil prices by taking a short position in the Oil ETF (USO).