Here's Why Hold Strategy is Apt for Valero (VLO) Stock Now
Valero Energy Corporation VLO has witnessed upward earnings estimate revisions for 2024 over the past seven days.
What’s Favoring the Stock?
Valero, currently carrying a Zacks Rank #3 (Hold), is a best-in-class oil refiner involved in the production of fuels and products that can meet the demands of modern life. Its refineries are located across the United States, Canada and the U.K. A total of 15 petroleum refineries, wherein Valero has ownership interests, have a combined throughput capacity of 3.2 million barrels per day.
The Renewable Diesel business segment of the firm comprises Diamond Green Diesel (“DGD”) — a joint venture between Darling Ingredients Inc. and Valero. DGD is a leading renewable fuel producer in North America. Low-carbon fuel policies across the globe primarily are aiding the demand for renewable diesel, therefore driving Valero’s Renewable Diesel business unit.
Valero boasts that its premium refining operations are resilient, even when the business operating environment is carbon-constrained. Its refining business has the capabilities to generate handsome cashflows that will allow it to return capital to shareholders and back growth projects.
Risks
However, being a premium refiner, the firm’s input costs are highly fluctuating, given the volatile pricing scenario of crude oil.
Stocks to Consider
Some better-ranked companies are SunocoLP SUN, Energy Transfer LP ET and Murphy USA Inc. MUSA. While Sunoco and Murphy sport a Zacks Rank #1 (Strong Buy), Energy Transfer carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco, the leading independent fuel distributor in the United States, has a stable business model and relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts.
With more than 125,000 miles of pipeline and associated energy assets, Energy Transfer will generate stable fee-based revenues. The partnership’s pipeline network spans all the key oil and natural gas resources across the United States.
Murphy USA is a renowned retailer of gasoline and convenience goods, distinguished by its adaptable business model that effectively enhances profitability during periods of economic expansion and recession.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
Sunoco LP (SUN) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Energy Transfer LP (ET) : Free Stock Analysis Report
