Canadian National Railway (USA) (CNI), Chevron Corporation (CVX), Kinder Morgan Energy Partners LP (KMP): Four of the Best Investments in Refining

Phillips 66 (NYSE:PSX)
The refiner’s top and bottom lines have exploded in recent years thanks to America’s energy renaissance. Net income in 2012 was 461% higher than in 2010 and 766% higher than during the recession in 2009. That’s incredible for a company of such size, but can it continue? Both sales and income slipped compared with 2011, and it seems as if the market is pricing in a continuing trend. The company trades with a P/E below 8 and a dividend yielding more than 2%, both potential steals for investors. Better yet, the profit margin in the first quarter of this year was 143% higher than that from the year ago period. It looks as if Phillips 66 (NYSE:PSX) can keep its profit machine going so long as domestic oil prices maintain their advantage on the international market.

Foolish bottom line
The key takeaway is to remember to include follow-on industries in your investing. What good is drilling for oil if the infrastructure isn’t in place to take it from fields to refiners, from refiners to the market? These are just four of the best investments to consider in oil transportation and refining, but the entire industry should benefit from improving development. Do you think another company deserves to be mentioned? Let me know in the comments section below.

The article 4 of the Best Investments in Refining originally appeared on Fool.com and is written by Maxx Chatsko.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio or his CAPS page, or follow him on Twitter, @BlacknGoldFool, to keep up with his writing on energy, bioprocessing, and biotechnology.The Motley Fool recommends Canadian National Railway and Chevron.

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