Nick Hodge - Wall Street Underground

02/22/2017 9:56 am EST


Nick Hodge

Founder and President, Outsider Club

Oil and gas aren’t out of the woods yet and could continue to be a difficult space for a bit longer. The only name we hold in the space is the downstream refiner HollyFrontier (HFC), which benefits from rising crude production.

HollyFrontier is a refiner, but it also owns 37% of Holly Energy Partners (HEP), a midstream energy infrastructure MLP from which HollyFrontier received more than $100 million in distributions in 2016. It also just acquired Petro-Canada Lubricants to participate in the higher-end lubricants market. 

It paid $845 million for a business that will add $100–$200M annually in new earnings. What’s more, HollyFrontier also participates in the asphalt business, which would see an uptick should any Trump infrastructure stimulus materialize. 

And it would also benefit from any tax benefits focused on the sector. HollyFrontier trades at $29.55 and is a buy under $30.00. It is currently yielding 4.6%.

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