Although the current market might be overvalued, Valero Energy Corporation (NYSE:VLO) and Marathon Petroleum Corp (NYSE:MPC) still have a considerable growth potential in terms of stock price. Dan Neiman, who is management partner at Neiman Funds, voiced this opinion on Fox Business while discussing the current economic climate and the possible effects of the US mid-term elections on the financial markets. He was joined by Patrick Kaser, the managing director of Brandywine Global, and Bob Iaccino, the chief market strategist at Tethys Partners.
“[…] The oil refining sector has been standing out as of late. Two stocks that have really come out of the top are Valero Energy Corporation (NYSE:VLO) and Marathon Petroleum Corp (NYSE:MPC). Marathon and Valero both have had a huge earnings growth over the past three years […],” said Neiman.
Neiman explained that the current sentiment on the stock market was either to hold the stocks through September and wait for the results of the US mid-term elections or to buy stocks that are selling at a discount and have a strong growth potential. He referred this as bottom-up stock picking. According to him, Valero Energy Corporation (NYSE:VLO) and Marathon Petroleum Corp (NYSE:MPC) perfectly fit this bill. Since there is currently less pressure from the buyers and given that the oil price will rise in the next two to three years, Valero Energy Corporation (NYSE:VLO) and Marathon Petroleum Corp (NYSE:MPC) can really boost portfolio earnings.
While discussing the relevance of US midterm elections to the ebbs and flows of the current stock market, Iaccino raised an interesting point. He said that, from an investor point of view, it is much more favorable to have two different parties in the White House and the Congress. Besides putting in place an effective system of checks and balances, this ensures that nothing is going to get done regulatory wise. Such a situation is important because entrepreneurs see it as a sign of stability and they know which rules to play by.