5 Best Oil Refinery Stocks To Buy

In this article, we discuss 5 best oil refinery stocks to buy. If you want to see more stocks in this selection, check out 10 Best Oil Refinery Stocks To Buy. 

5. Phillips 66 (NYSE:PSX)

Number of Hedge Fund Holders: 34

Phillips 66 (NYSE:PSX) is a Texas-based energy manufacturing and logistics company that operates through four segments – Midstream, Chemicals, Refining, and Marketing and Specialties. The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates, aviation, and renewable fuels at refineries in the United States and Europe. Phillips 66 (NYSE:PSX) is one of the premier oil refinery stocks to invest in. 

On December 9, Phillips 66 (NYSE:PSX) revealed a $2 billion capital budget for FY 2023, including 50% of planned $1.1 billion in growth capital supporting low-carbon efforts, compared to 45% allocated in the company’s 2022 plan. The company aims to spend $1.1 billion in growth capital in its refining business in 2023, including $729 million on the conversion of the San Francisco Refinery in Rodeo, California, into one of the world’s biggest renewable fuels facilities.

Piper Sandler analyst Ryan Todd on November 9 raised the firm’s price target on Phillips 66 (NYSE:PSX) to $155 from $116 and kept an Overweight rating on the shares

According to Insider Monkey’s Q3 data, Phillips 66 (NYSE:PSX) was part of 34 hedge fund portfolios, compared to 38 in the prior quarter. D E Shaw held the leading stake in the company, consisting of 3.10 million shares worth $250.3 million. 

4. Shell plc (NYSE:SHEL)

Number of Hedge Fund Holders: 39

Shell plc (NYSE:SHEL) is a London-based energy and petrochemical company with operations in Europe, Asia, Oceania, Africa, the United States, and rest of the Americas. The company refines crude oil and other feed stocks, such as low-carbon fuels, lubricants, bitumen, sulfur, gasoline, diesel, heating oil, aviation fuel, and marine fuel. It is one of the leading oil refinery stocks to monitor. On November 28, Shell plc (NYSE:SHEL) said it agreed to acquire Danish biogas producer Nature Energy Biogas from Davidson Kempner Capital Management for nearly $2 billion. It is Europe’s largest producer of renewable natural gas, which will improve Shell plc (NYSE:SHEL)’s capacity to work with its established customer base across multiple sectors to accelerate its transition to net-zero emissions.

On December 6, Deutsche Bank analyst James Hubbard raised the firm’s price target on Shell plc (NYSE:SHEL) to 2,987 GBp from 2,761 GBp and kept a Buy rating on the shares.

According to Insider Monkey’s data, 39 hedge funds were long Shell plc (NYSE:SHEL) at the end of September 2022, and Ken Fisher’s Fisher Asset Management held the largest stake in the company, with 20.8 million shares worth over $1 billion. 

Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:

“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”

3, Valvoline Inc. (NYSE:VVV)

Number of Hedge Fund Holders: 40

Valvoline Inc. (NYSE:VVV), priorly known as the Continuous Oil Refining Company, sells automotive oil, additives, and lubricants under the Valvoline brand. It is one of the best oil refining stocks to monitor. Valvoline Inc. (NYSE:VVV) paid a $0.125 per share quarterly dividend to shareholders on December 15. 

RBC Capital analyst Steven Shemesh on December 6 initiated coverage of Valvoline Inc. (NYSE:VVV) with an Outperform rating and a $39 price target. Following the sale of its global products division, Valvoline Inc. (NYSE:VVV) will be a “faster growing, higher margin business, with strong free cash flow generation”, the analyst told investors in a research note. The analyst believes a 14-times target multiple appropriately balances its “industry leading growth against separation risk/terminal growth concerns.”

According to Insider Monkey’s data, 40 hedge funds were long Valvoline Inc. (NYSE:VVV) at the end of Q3 2022, compared to 39 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the leading position holder in the company, with 5.8 million shares worth $148 million. 

Wasatch Core Growth Fund released its Q2 2021 investor letter and mentioned Valvoline Inc. (NYSE:VVV): 

“Another significant contributor was Valvoline, Inc. (VVV), a company that manufactures lubricants and car parts and operates oil-change service centers. In addition to benefiting from the economic reopening, the company has discovered the advantages of making a mobile app available. Valvoline customers can use the app to find the closest service center and view live estimated wait times. Certainly, the adoption of technology to improve productivity and convenience isn’t a new theme. But we see mobile digitalization as a highly disruptive innovation that creates additional relationships among companies, distributors and customers. As a result, mobile digitalization is a competitive consideration in more and more of the companies that we evaluate for investment. In the first quarter, Valvoline’s stock declined partially because investors worried about the increasing popularity of electric vehicles (EVs)— which are much less dependent on petroleum products. But the stock rebounded in the second quarter, we think partly based on the realization that EVs still represent a tiny percentage of new cars sold and an even smaller percentage of cars in service. Moreover, Valvoline reported strong earnings and raised projections for the future.”

2. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Holders: 47

Valero Energy Corporation (NYSE:VLO) is a Texas-based company that manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments – Refining, Renewable Diesel, and Ethanol. Valero Energy Corporation (NYSE:VLO) declared a $0.98 per share quarterly dividend on December 8. It is one of the premier oil refinery stocks to invest in. 

Piper Sandler analyst Ryan Todd on November 9 lifted the firm’s price target on Valero Energy Corporation (NYSE:VLO) to $177 from $147 and reiterated an Overweight rating on the shares.

Among the hedge funds tracked by Insider Monkey, 47 funds reported owning stakes worth $1.3 billion in Valero Energy Corporation (NYSE:VLO) at the end of Q3 2022, compared to 43 funds in the prior quarter worth $760 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the biggest position in the company, with 3.13 million shares worth $334.5 million. 

1. Marathon Petroleum Corporation (NYSE:MPC)

Number of Hedge Fund Holders: 50

Marathon Petroleum Corporation (NYSE:MPC) was founded in 1887 and is headquartered in Findlay, Ohio. It operates as an integrated downstream energy company in the United States, operating in two segments – Refining & Marketing, and Midstream.  The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States. It is one of the top oil refinery stocks to buy now. 

On November 1, Marathon Petroleum Corporation (NYSE:MPC) declared a $0.75 per share quarterly dividend, a 29.3% increase from its prior dividend of $0.58. The dividend was paid to shareholders on December 12. 

Wells Fargo analyst Roger Read raised the price target on Marathon Petroleum Corporation (NYSE:MPC) on November 3 to $131 from $116 and kept an Overweight rating on the shares. While Q4 results may be softer due to higher turnaround activity planned, the analyst noted that upside potential remains significant.

According to Insider Monkey’s data, 50 hedge funds were bullish on Marathon Petroleum Corporation (NYSE:MPC) at the end of Q3 2022, and Paul Singer’s Elliott Management is the leading position holder in the company, with 11 million shares worth over $1 billion. 

Here is what Clark Street Value has to say about Marathon Petroleum Corporation (NYSE:MPC) in its Q4 2021 investor letter:

“During the worst of covid, I bought some LEAPs on Marathon Petroleum (MPC) as a proxy for Par Pacific (PARR) since long dated options weren’t available on the later.  Those MPC calls expire next month and I’ll take profits, with PARR I’ve reduced my position throughout the year and might sell the rest early next year, I’ve owned it for 6-7 years and it has gone nowhere, they haven’t touched the NOLs, just a difficult business that I probably don’t understand as well as I should.”

You can also take a look at 10 Stocks Most Affected By Inflation and 10 Biggest Dividend Cuts of 2022.