BP Holdings in Tesoro
Tesoro Corporation (NYSE:TSO) is a refiner and marketer of petroleum in the United States. The company operates in two business segments, namely wholesale markets, selling motor fuels in the retail market, and refining crude oil, selling refined products in bulk. During Q1, Pickens initiated a position in Tesoro Corporation (NYSE:TSO) by purchasing 99,657 shares. Tesoro Corporation (NYSE:TSO) currently accounts for 5.88% of BP’s portfolio and is ranked at sixth place.
Are investments safe?
Tesoro Corporation (NYSE:TSO) has displayed smart investment strategies to boost profitability. The company has spent heavily to back larger income improvement projects. The most major projects include rail facilities and capacity expansion. Tesoro Corporation (NYSE:TSO)’s smooth acquisition of BP refinery assets in California is yet another step in that direction. Furthermore, the company continues to spend on a number of small projects, which could also enhance its earnings.
As a result of this aggressive investment strategy, the company was able to generate an operating income of $300 million at the end of Q1. With this solid investment strategy and strong financial situation, its stock price has increased 169% in the last year alone. Recently, Credit Suisse named Tesoro as one of the most undervalued stocks in the refinery sector. Therefore, they have increased their price target to $74 per share. At current valuations, the stock looks like a good buy with a 1.90% dividend yield and strong upside potential.
BP Holdings in Occidental Petroleum
Occidental Petroleum Corporation (NYSE:OXY) is a holding company. The company operates in three business segments, namely the chemical and midstream segment; the oil and gas segment; and marketing/other segments. Occidental Petroleum Corporation (NYSE:OXY) is a consistently favored stock in Pickens’ portfolio.
Are Investments Safe?
Occidental Petroleum Corporation (NYSE:OXY) has been able to enhance its production by the acquisition of established properties. At the end of Q1, Occidental’s total production was 763,000 barrels, representing an increase of 8,000 barrels over the first quarter of 2012. As a result, its Q1 EPS of $1.69/share beat Wall Street projections by $0.14/share.
The company is also looking to enhance its margins. Occidental Petroleum Corporation (NYSE:OXY) has been able to reduce its domestic well and operating costs by about 19% during Q1 to this end. This solid financial situation permits Occidental to pay hefty quarterly dividends. In the past five years, Occidental Petroleum Corporation (NYSE:OXY) has been able to grow its dividend by 100%. Investors often admire solid profitability momentum. Thus, in the last six months alone, its share price has appreciated 28%. I believe, with a forward PE of 12.64, the stock has significant upside potential.
In conclusion
T Boone Pickens is a value investor who makes worthwhile choices. He likes companies with substantial upside potential. His latest three picks have had an excellent profitability momentum. Pioneer Natural Resources is one of the best among these three. The company is well positioned with three liquids and resource-rich core assets. Pioneer has substantial upside potential as it is anticipating an increase in EPS of 27%. Tesoro and Occidental Petroleum also look like safe investments.
siraj sarwar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. siraj is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Top Picks of T. Boone Pickens originally appeared on Fool.com is written by siraj sarwar.
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