This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Valero Energy Is a Stock Worth Remembering

Stocks in this article: VLO MPC HFC PSX TSO WNR CVI PXD EPD

NEW YORK (TheStreet) -- Changing market conditions that could affect profitability have made many investors wary of refining stocks. This is particularly true for Valero Energy (VLO) , the biggest independent player in the industry.

The narrowing spread between the price of Brent and West Texas Intermediary crude has also helped push Valero shares down, by 5.9% in the last two months.

Is it worth your investment if you have a long-term view? According to some analysts including Morgan Stanley, it is.

Read More: 10 Stocks George Soros Is Buying

Bill Day, Valero's vice president for communications, said in an email to TheStreet the company will take advantage of an uptake in exports of condensates, an ultra-light crude oil, and is also well positioned to capitalize on the growing exports of other kinds of refined crude oils from the U.S.

Refinery stocks have had a hard time but some analysts, such as Citi, have been encouraged by their recent recovery.

At around $54, Valero Energy's shares have risen by 6% for the year to date, compared with the almost 8% gain for the S&P 500 for the same period. The company's shares are priced 9.5 times its earnings for the last 12 months. On the other hand, peers Marathon Petroleum (MPC) , HollyFrontier Corp (HFC) , Phillips 66 (PSX) , Tesoro Corp (TSO) , Western Refining (WNR) and CVR Energy (CVI) are all trading at more than 14.6 times their trailing 12-month earnings.

Valero is also one of the leading producers of ethanol, a renewable fuel. The company boasts of 16 refineries, representing a massive throughput capacity of 2.9 million barrels per day, and 10 ethanol plants that can produce up to 85,000 barrels of biofuel per day. The company gets more than 80% of its operating income from refining while the rest comes from the ethanol segment.

Read More: Trian Management Key in Dollar General’s War With Family Dollar

Earlier this year, the U.S. Commerce Department allowed Pioneer Natural Resources (PXD) and Enterprise Product Partners (EPD) to begin exporting condensates. The ruling could pave the way for lifting the 40-year old crude export ban. An increase in exports could narrow the gap between the price of American WTI and European Brent crudes, eliminating the price advantage which American refiners have enjoyed for several years.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs