Valero Energy (VLO) Is Today's Strong On High Volume Stock

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 ( VLO) as a strong on high relative volume 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 $363.2 million.
  • VLO has traded 1.0 million shares today.
  • VLO is trading at 2.22 times the normal volume for the stock at this time of day.
  • VLO is trading at a new high 3.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 2.6%. VLO has a PE ratio of 8. Currently there are 11 analysts that rate Valero Energy a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Valero Energy has been 6.0 million shares per day over the past 30 days. Valero Energy has a market cap of $31.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.69 and a short float of 3.1% with 2.69 days to cover. Shares are up 22.3% year-to-date as of the close of trading on Monday.

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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 solid stock price performance, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 16.4% when compared to the same quarter one year prior, going from $828.00 million to $964.00 million.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 487.29% to $1,433.00 million when compared to the same quarter last year. In addition, VALERO ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -53.17%.

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