Occidental Petroleum Corporation

Occidental Petroleum Corporation (NYSE: OXY) is a US-based exploration and production firm with operations in Latin America and the Middle East. Oil and gas, chemical and midstream, and marketing are the three main reporting segments of the company.

Key Highlights:

• The company reported a 45.75% increase in net sales to USD 25.96 billion in FY21 (ended December 31, 2021), compared to USD 17.81 billion in FY20, due to higher realized commodity prices.
• OXY reported a net income of USD 2.32 billion in FY21, compared to a loss of USD 14.83 billion in FY20.
• It is operating at a higher EBITDA and net margins of 50.8% and 10.7% in FY21 compared to an industry median of 35.6% and 8.2%, respectively.
• However, its debt/equity ratio is significantly higher to 2.80x as of FY21 than the industry median of 0.63x.
• Stock is currently trading above its crucial short-term (50-day) and long-term (200-day) SMA support levels, and RSI is at 80.34, indicating an overbought zone.
• Stock is leaning towards the higher-band of the 52-week range of USD 21.62 to USD 58.77.
• OXY stock price has surged 40.07% and 86.64% in the past one and three months, respectively.

Conclusion:

Considering the company's improving topline and bottom-line performances, a surge in the stock price in a short span, macroeconomic headwinds, leveraged balance sheet, and hyped technical indicators, we recommend a "Watch" rating on the stock at the current price of USD 57.43, up 5.43% as of March 09, 2022, at 12:24 PM ET.

Three-Year Technical Price Chart (as of March 09, 2022, at 12:24 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

TimkenSteel Corporation

TimkenSteel Corporation (NYSE: TMST) is American alloy steel, carbon, and micro-alloy steel manufacturer. Special bar quality steel, seamless mechanical tubes, and value-add solutions, such as precision steel components, are part of the TMST's portfolio.

Key Highlights:

• The company reported a 54.44% increase in net sales to USD 1.28 billion in FY21 (ended December 31, 2021) from USD 0.83 billion in FY20, due to the rise in surcharges and higher volumes of scrap and alloys
• TMST reported a net income of USD 171.0 million in FY21, compared to a loss of USD 61.9 million in FY20.
• The company's cash conversion days have improved to 50.6 days in FY21 from 98.7 days in FY20.
• However, it reported gross and EBITDA margins of 17.1% and 16.0% in FY21, respectively, which are much lower than the industry medians of 49.1% and 40.8%.
• Stock is currently trading far above its crucial short-term (50-day) and long-term (200-day) SMA support levels, and the RSI is at 60.32, indicating an overbought zone.
• Stock is leaning towards the higher-band of the 52-week range of USD 9.32 to USD 20.34.
• TMST's stock price has surged 25.71% and 42.87% in the past three and six months, respectively.

Conclusion:

Considering the significant surge in the stock price in a brief span, improving fundaments, macro headwinds, margins pressure, and other technical indicators, we recommend a "Watch" rating on the stock at the current price of USD 18.53, up 4.28% as of March 09, 2022, at 12:29 PM ET.

Three-Year Technical Price Chart (as of March 09, 2022, at 12:29 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.