Top Picks 2020: PBF Energy (PBF)

01/16/2020 5:00 am EST

Focus: ENERGY

Crista Huff

Editor, Cabot Undervalued Stocks Advisor

PBF Energy (PBF) — my Top Pick for growth & income in 2020 — is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks and lubricants in the United States, explains Crista Huff, editor of Cabot Undervalued Stocks Advisor.

The company will close on their purchase of a refinery in Martinez, CA from Shell in the first quarter of 2020. The acquisition gives PBF Energy increased regional diversity and cost synergies and should be immediately accretive to 2020 EPS.

The company is expected to greatly benefit from the International Maritime Organization’s new mandate — IMO 2020 — that the world’s 39,000 ships and tankers must use either scrubbers or low-sulfur diesel fuel, beginning January 2020.

Profits and share prices within the energy sector fell in 2019. PBF Energy is expected to finish 2019 with $0.98 EPS, then see profits soar to $4.62 per share in 2020. In addition, the stock offers a yield of 3.8%.

Energy stocks are now rebounding, influenced by a strong U.S. economy, positive trade decisions coming from China, and IMO 2020. There’s over 50% of upside potential if PBF Energy returns to its 2018 high above $50 per share.

(Editor's note: Last year, Crista Huff had two big winners. Apollo Global Management (APO) was up 103% and Crista suggests that investors exit their positions. Sleep Number (SNBR), rose 53% and Huff says, "While the numbers at SNBR no longer support an aggressive growth outlook, this volatile stock should continue to offer a capital gain opportunity in 2020.)

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