Water-Logged And Getting Wetter: Valero Energy (VLO)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Valero Energy ( VLO) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Valero Energy as such a stock due to the following factors:

  • VLO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $232.4 million.
  • VLO has traded 3.3 million shares today.
  • VLO traded in a range 229.7% of the normal price range with a price range of $2.07.
  • VLO traded below its daily resistance level (quality: 32 days, meaning that the stock is crossing a resistance level set by the last 32 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on VLO:

Valero Energy Corporation operates as an independent petroleum refining and marketing company in the United States, Canada, the Caribbean, the United Kingdom, and Ireland. It operates through two segments, Refining and Ethanol. The stock currently has a dividend yield of 2.1%. VLO has a PE ratio of 9.4. Currently there are 8 analysts that rate Valero Energy a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Valero Energy has been 7.4 million shares per day over the past 30 days. Valero Energy has a market cap of $28.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.54 and a short float of 2.2% with 2.17 days to cover. Shares are up 4.5% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Valero Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • VLO's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 45.23% and other important driving factors, this stock has surged by 42.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, VLO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • VALERO ENERGY CORP has improved earnings per share by 45.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, VALERO ENERGY CORP increased its bottom line by earning $4.97 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($5.31 versus $4.97).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 26.2% when compared to the same quarter one year prior, rising from $466.00 million to $588.00 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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