Valero Energy

01/07/2015 7:00 am EST


Jim Powell

Principal Analyst, Global Changes & Opportunities

Exceptional profits often come when high-quality companies stumble. At the top of my fallen angel list for 2015 are blue chip energy stocks that have been hurt by plunging oil prices, forecasts Jim Powell, editor of Global Changes & Opportunities Report.

I think the stocks will rebound quicker than expected. The energy sector is the closest that Wall Street ever comes to a slam dunk.

No industry has such a long-term track record for being cyclical and for returning excellent profits to investors who buy its leaders when they are cheap.

I think more aggressive investors should also consider Valero Energy (VLO), America's largest oil refiner. Valero is also one of the world’s most efficient refiners.

New pipelines will increase the amount of oil to Valero and reduce the company’s costs at the same time. Valero also owns and operates ten ethanol plants. Valero is also attractive because it sells much of what it produces directly to end users.

The company has over 7,400 wholesale and retail outlets including service stations, truck stops, and heating oil operations. Branded retail outlets include Valero, Diamond Shamrock, Ultramar, Beacon, and Texaco.

Investors are so nervous about the Middle East, low oil prices, and the stock market, that Valero currently has a very low P/E of 7.0 and a 2.40% dividend yield. I think VLO will perform well in long-term accounts.

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