Validea's View on Valero

05/19/2014 8:00 am EST


John Reese

Founder and CEO, And Validea Capital Management

To select buy-rated stocks, John Reese of Validea applies proprietary screening models based on the investing strategies of "legendary" investors; this stock scores a 100% rating based on the Cornerstone Value strategy of James O'Shaughnessy.

Valero Energy Corporation (VLO) is an independent petroleum refining and marketing company.

The first requirement of the Cornerstone Growth Strategy is that the company has a market capitalization of at least $150 million.

This will screen out the companies that are too illiquid for most investors, but still include a small growth company. VLO, with a market cap of $30,263 million, passes this criterion.

The Cornerstone Growth methodology looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company's earnings must increase each year for a five year period.

VLO, whose annual EPS before extraordinary items for the last five years (from earliest to the most recent fiscal year) were -0.51, 1.62, 3.68, 3.74, and 4.96, passes this test.

The Price/Sales ratio according to this strategy should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. VLO's Price/Sales ratio of 0.22, based on trailing 12 month sales, passes this criterion.

The final ,/em>criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion.

This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. VLO, whose relative strength is 80, is in the top 50 and would pass this last criterion.

Subscribe to Validea hereā€¦

More from

Value Pair: Mining and Refining

Enterprise: The Gorilla in LPG

EOG: A Top Producer

Related Articles on STOCKS

Keyword Image
Conoco: A Breakout in Energy
09/21/2018 5:00 am EST

Our daily breakout stock ideas are most suitable for aggressive investors seeking ideal entry points...