Today's Strong And Under The Radar Stock: Valero Energy Partners (VLP)

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.

Trade-Ideas LLC identified Valero Energy Partners ( VLP) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Valero Energy Partners as such a stock due to the following factors:

  • VLP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.4 million.
  • VLP is making at least a new 3-day high.
  • VLP has a PE ratio of 42.
  • VLP is mentioned 0.87 times per day on StockTwits.
  • VLP has not yet been mentioned on StockTwits today.
  • VLP is currently in the upper 20% of its 1-year range.
  • VLP is in the upper 35% of its 20-day range.
  • VLP is in the upper 45% of its 5-day range.
  • VLP is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on VLP:

Valero Energy Partners LP owns, operates, develops, and acquires crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets in the United States. The stock currently has a dividend yield of 2.2%. VLP has a PE ratio of 42. Currently there are 6 analysts that rate Valero Energy Partners a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Valero Energy Partners has been 74,500 shares per day over the past 30 days. Valero Energy has a market cap of $1.6 billion and is part of the basic materials sector and energy industry. Shares are up 19.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Valero Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues rose by 42.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VALERO ENERGY PARTNERS LP reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, VALERO ENERGY PARTNERS LP increased its bottom line by earning $1.01 versus $0.03 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.01).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • Net operating cash flow has decreased to $12.51 million or 23.37% when compared to the same quarter last year. Despite a decrease in cash flow VALERO ENERGY PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -53.28%.
  • The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 6.48, which shows the ability to cover short-term cash needs.

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