If you invested $250 in Occidental Petroleum 4 years ago, here's how much money you'd have today

western oil (Oxy -0.15%) Stock prices have skyrocketed in recent years. If he had invested $250 in the stock four years ago, he would now have approximately $1,250. The return rate is approximately 400%.

But there's a catch. Over the past six years, Occidental stock has had a total return of about 0%. Does such a thing ever happen? That's possible because the stock price fell 80% from 2019 to 2021. The recent surge is simply a return to previous levels.

What should you know about stocks today?

3 things to know about Occidental stock today

The first thing to know about Occidental stock is that its future is tied to oil prices. This is true for nearly all fossil fuel producers. For example, over the past five years, spot oil prices have increased by 28%. Meanwhile, Occidental stock's value rose 22%. Although not a perfect match, it is clear what the long-term drivers of stock price movements are.

The second thing to know about Occidental today is that as long as oil prices remain high, the company should be able to make good profits. There's nothing to hinder the stock price if oil prices fall, but with oil above $80 a barrel, Occidental has consistently generated double-digit profit margins. If you're an oil bull, this stock is for you.

Finally, Occidental is in the midst of a major business transformation. Acquires independent oil and gas company Crown Rock for $12 billion. To finance the acquisition, Occidental will pay $9 billion in cash, issue $1.7 billion in new stock and assume $1.2 billion in debt. Management is obviously bullish on the deal, but the production of the acquired assets is down about 35%. This compares to a company-wide attrition rate of 20% to 25%. If oil prices fall, Occidental's stock price could plummet again. This is because the company has declining profitability, high debt levels, and poor asset quality.