Phillips 66 (PSX), Valero Energy Corporation (VLO), Devon Energy Corp (DVN): Look for Gains With These Oil Refiners

Page 1 of 2

When it comes to investing in the energy sector, you probably know the usual suspects.  Companies like Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) dominate the space and carry huge market capitalizations in the hundreds of billions of dollars.  Stocks such as these are Dow Jones 30 components, and some of America’s best known and most closely followed companies.  They pump out big profits and are known for rock-solid balance sheets and reliable dividend increases.  However, you may not be as familiar with oil refinery stocks, which carry many of the same qualities as the big boys of the energy sector.  Stocks in the refinery industry have strong operations with solid dividends, along with more room for their stocks to run due to smaller market values than their mega-cap brethren.

Valero Energy Corporation (NYSE:VLO)Three names to consider

Phillips 66 (NYSE:PSX) is an interesting name both because it carries the largest market capitalization of the refiners and only recently began trading as an independent entity.  Formerly owned by ConocoPhillips, Phillips 66 (NYSE:PSX) was spun off last year.  At the time, management felt that each part of the company would be worth more than the sum of the parts, and they’ve been proven right.  Phillips 66 (NYSE:PSX) stock has soared since the spin-off, advancing more than 80% since the split.

Phillips 66 (NYSE:PSX) reported full-year 2012 adjusted earnings of $8.46 per share, compared with adjusted earnings per share of $5.66 a year ago.  Its impressive operating performance means that despite its huge share price acceleration, the stock still isn’t expensive on a trailing earnings basis.  The stock currently trades for less than 8 times its 2012 adjusted earnings per share.  In addition, the company has raised its dividend twice already, and yields 2% at recent prices.

Valero Energy (NYSE:VLO) is a close competitor of Phillips 66 (NYSE:PSX), with a slightly smaller market value of approximately $25 billion.  Like Phillips 66, Valero Energy Corporation (NYSE:VLO) also reported spectacular fiscal 2012 fourth-quarter and annual results.  Full-year 2012 net income attributable to Valero Energy Corporation (NYSE:VLO) Energy Corporation (NYSE:VLO) stockholders was $2.1 billion, or $3.75 per share. Included in the results were non-cash asset impairment losses of $983 million after taxes, or $1.77 per share.  Stripping away all one-time events, adjusted earnings per share came in at $5.59 for the full-year.

Valero Energy Corporation (NYSE:VLO) attributed its success to higher refining margins as well as lower refining expenses.  This combination led to the spike in Valero’s profitability.  Going forward, the company intends to utilize cash from operations effectively for shareholders through a number of initiatives.  First, management intends to keep buying back stock to increase earnings per share. For the full-year 2012, Valero used $281 million to purchase 10.6 million shares of the company’s stock.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!