Cramer’s Cautionary Take: Why Occidental Petroleum (OXY) May Not Be Worth the Risk

Jim Cramer, the outspoken host of Mad Money, has long been a bellwether for retail investors seeking guidance on stock picks. Yet his recent remarks on Occidental Petroleum (OXY) in the Lightning Round segments paint a stark picture: the energy giant is not a buy. In a blunt assessment on March 12, 2025, Cramer declared, “It’s got a lot of debt, and it’s just not that great… Get a better oil.” This warning underscores a persistent skepticism toward OXY’s financial health, operational execution, and positioning in a shifting market. Let’s unpack the reasons behind his stance—and why investors should take heed.

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The Debt Overhang: A Weight on OXY’s Shoulders

Cramer’s primary concern? OXY’s staggering debt load. As of early 2025, the company’s total debt exceeds $18 billion, a figure that has grown steadily despite asset sales and cost-cutting measures. . This debt burden strains its ability to weather market downturns, particularly as oil prices remain volatile. While OXY generated $3.8 billion in operating cash flow in Q3 2024, its debt-to-equity ratio of 2.3x (as of late 2024) raises red flags.

Cramer argues that debt-heavy companies like OXY face a “double whammy” in a slowing economy: reduced cash flow from lower oil prices and pressure to service loans. With crude prices hovering near $70/barrel—well below the $80+ levels needed for sustained profitability—OXY’s margins are under strain.

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Stock Performance: A Losing Streak

OXY’s shares have been a disappointment for investors. Year-to-date (YTD) in early 2025, the stock had declined 3.7%, while its 12-month performance showed a 25% drop, underperforming peers like ExxonMobil (XOM) and Chevron (CVX). .

The underperformance isn’t random. In February 2025, OXY announced plans to sell $1.2 billion in assets to shore up liquidity, a move that failed to reassure investors. Additionally, the company missed Q1 production guidance, with output at 1.39 MMboepd against estimates of 1.43 MMboepd, further eroding confidence.

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Operational Headwinds: Missed Targets and Market Challenges

Cramer has also highlighted OXY’s struggles to capitalize on market shifts. Despite tariffs and trade dynamics favoring U.S. energy exports, the company has underdelivered. For instance, weaker demand from China—a key buyer—has compounded oversupply issues, depressing prices. Meanwhile, OXY’s ambitious carbon capture projects, which it touts as a growth driver, remain unproven and costly.

Cramer’s frustration with OXY’s execution is evident: “They’re not hitting their numbers, and the debt is just too much,” he remarked in the March Lightning Round. This sentiment aligns with broader analyst downgrades, with several firms lowering price targets in early 2025.

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Cramer vs. Buffett: A Clash of Perspectives

OXY’s position is further complicated by conflicting signals from major investors. Warren Buffett’s Berkshire Hathaway held 255 million OXY shares (worth $13 billion) as of Q3 2024, a bet Cramer openly questions. “Why would Buffett invest in a company with so much debt?” he asked skeptically.

Cramer’s answer: Buffett’s long-term horizon may tolerate volatility, but retail investors cannot. For ordinary investors, the risks of OXY’s debt-heavy model outweigh its potential.

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The Bigger Picture: Energy vs. AI—Where’s the Value?

Cramer’s broader strategy favors sectors with clearer growth trajectories. In early 2025, he ranked OXY 4th on his list of discussed stocks, behind AI-focused equities. “AI stocks are delivering shorter-term returns that energy can’t match right now,” he noted.

This prioritization reflects a market shift: while energy stocks face macroeconomic headwinds, AI and tech firms are riding waves of innovation and investor optimism. For instance, NVIDIA (NVDA) surged 50% YTD in early 2025, contrasting sharply with OXY’s decline.

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Conclusion: Proceed with Caution

Jim Cramer’s warnings on OXY are unequivocal. The company’s debt, underperformance, and operational missteps paint a cautionary picture. With crude prices uncertain, China’s demand sluggish, and better alternatives available in tech and other sectors, OXY’s risks far outweigh its rewards.

Investors seeking energy exposure might consider lower-debt peers like ConocoPhillips (COP) or Devon Energy (DVN), which have stronger balance sheets and better production metrics. Meanwhile, Cramer’s emphasis on AI stocks reflects a broader market truth: in 2025, growth is in innovation, not legacy energy’s debt-laden past.

As Cramer put it, “Get a better oil.” For now, OXY isn’t it.