For about two decades I ran an investment trading service that outperformed the major market indexes for years and years. The trick was to find stocks that went from a flat line, or coiled spring, to a breakout.
To further that mission I acquired custom software that looks for stocks crossing above their five-day trading range by more than one standard deviation.
These charts are then run through further filters looking for companies with any or all of the following qualities: strong support levels, a specific catalyst, a thin float, a high short position, a volume surge, strong fundamentals, and a good story.
Some of these are formulaic but mostly it comes down to recognizing patterns due to time in the market. I’ve spent the last year refining my techniques and it has produced some amazing gains including:
A possible gain of 1,483% in Dragonfly Energy(DFLI)
As much as a 437% gain in Palantir (PLTR)
And a possible 259% gain in Archer (ACHR)
Today I’d like to tell you about a stock that this system picked up this morning. It’s called Occidental Petroleum (OXY).
Let me preface this by saying this isn’t a coiled spring but a falling knife that formed a double bottom followed by a breakout.
However, I like it because Warren Buffett – the Oracle of Omaha- has been buying OXY all year.
The reason the stock is breaking out is that the company reported better-than-expected earnings for the fourth quarter. The Permian Basin oil producer said that it had hit its debt reduction target.
According to the IBD:
“Occidental Petroleum announced Tuesday Q4 EPS growing 8% to 80 cents with sales totaling $6.84 billion, down 4.6% vs. a year ago. Prior to the report late Tuesday, analysts forecast earnings of 68 cents per share with revenue declining to $6.98 billion.
Occidental Petroleum also produced 1.463 million barrels of oil equivalent per day in Q4.
OXY has now delivered better-than-expected earnings in the last three quarters, starting it off with a bang in Q2 when it saw a surprise 51% profit increase, breaking a string of five consecutive quarterly earnings declines.”
On top of this, the company repaid $4 billion in debt. OXY ended Q4 with free cash flow of $1.35 billion, up 27% compared to Q4 2023.
The company also raised its dividend 9%, to 24 cents a share payable April 15 to stockholders of record as of March 10.
Berkshire Hathaway bought 763,000 OXY shares on Feb 7 for an average price of $46.82. That said, he has been buying since 2000 and has paid as much as $75 a share.
Buffet now owns 28.3% of OXY. It is the sixth-largest position in Berkshire Hathaway. You can buy it today for $51.46.
All the best,
Christian DeHaemer
Outsider Club
P.S. Look for Christian DeHaemer’s Breakaway Trader invite over the next few weeks. Members of American Stock Investor will get a discount. Membership will be limited.
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