Here's Why Hold Strategy is Apt for Valero (VLO) Stock Now
Valero Energy Corporation VLO has gained 7.5% in the past year against a decline of 0.3% of the composite stocks belonging to the energy sector.
What’s Favoring the Stock?
Valero, currently carrying a Zacks Rank #3 (Hold), is a best-in-class oil refiner involved in producing 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
Better-ranked players in the energy space include The Williams Companies, Inc. WMB, Weatherford International plc WFRD and Transportadora de Gas del Sur SA TGS. While The Williams Companies sports a Zacks Rank #1 (Strong Buy), Weatherford International and Transportadora de Gas carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.
Weatherfordis a key energy player and is engaged in offering exclusive drilling technologies that will maximize clients’ reservoir exposure. Weatherford is also involved in well construction and completion activities in an efficient manner.
Transportadora’s midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. It generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina. Also, TGS has lower debt exposure than the composite stocks belonging to the industry.
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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
Transportadora De Gas Sa Ord B (TGS) : Free Stock Analysis Report
Weatherford International PLC (WFRD) : Free Stock Analysis Report
