Like many stocks in the energy sector, master limited partnerships, or MLPs, remain out of favor. Th...
Valero: Refined Gains
04/10/2017 2:50 am EST
Within the energy sector, the refining stocks are trading at the lower end of their respective ranges, observes Bryan Perry, income expert and editor of Cash Machine.
With the summer travel season just two months away when demand for gasoline, diesel and jet fuel rises, I find it opportunistic to put some money to work in one of America’s largest and finest refiners, Valero Energy (VLO).
With a market cap of $29.7 billion and revenues expected to top $82 billion this year, the company is a powerhouse in the petroleum refining and ethanol producing industry. Modest crude prices and higher seasonal demand are catalysts to the refining business.
Earnings for VLO are expected to rise by 35% from $3.72 in 2016 to $5.03 in 2017 and then gain 23% in 2018 to $6.18, according to a consensus of 20 analysts who cover the company and the stock.
The company pays a $2.80 per share annual dividend, putting its payout ratio at a hugely attractive 48% that supports a current yield of 4.25% at today’s price of $66.
The stock has been trading in a tight range of $65-$70 for the past four months and is poised for a breakout to the upside.
The stock is a prime fit for our Safe Haven Portfolio for both income and capital appreciation. Buy VLO under $67 per share.
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