October 5, 2018

Occidental Petroleum Could Return 10% Per Year From Today’s Starting Point



Peter Lynch is one of the best professional portfolio managers of all time. During his tenure as portfolio manager of the Fidelity Magellan Fund between 1977 and 1990, his fund generated annual returns of 29.2%. To put this into perspective, a 29.2% annual return over 13 years would have turned a $10,000 investment into nearly $280,000. One of Lynch’s core investing principles is to do your research, meaning investors should always conduct thorough due diligence before buying individual stocks. This includes valuation analysis as an important part of the research process.

The price-to-earnings growth ratio, or PEG ratio for short, can be a helpful valuation tool for investors to find undervalued stocks. Occidental Petroleum Corporation (OXY) currently has a PEG ratio of just 0.24, based on its expected earnings growth over the next five years. This low of a PEG ratio means the stock could be significantly undervalued. In addition, the stock has a high dividend yield of 4%. As a result, Occidental Petroleum could be an attractive stock for value and income investors..






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