A prudent investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bull run.
Phillips 66 PSX is a Refining and Marketing stock that has performed well so far this year and has the potential to sustain the momentum in the near term. So, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse so far this year. Shares of Phillips 66 have returned 33.1% year to date, outperforming the 7.8% growth of the industry it belongs to.
Solid Rank: Phillips 66 currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer attractive investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Nine estimates for 2019 have moved north in the past 60 days versus no downward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for 2019 has inched up to $8.72 from $7.48.
Positive Earnings Surprise History: Phillips 66 has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive earnings surprise of 31.4%.
Growth Drivers: Phillips 66’s refining, chemicals and midstream operations are all leaders in terms of size, efficiency and strength. The company is on track to enhance the potential of every business segment by streamlining its portfolio of assets, and investing in growth and development.
The Midstream business is in high demand in the United States as there is a huge need for fresh pipeline and infrastructure properties in the flourishing shales owing to the existing bottleneck problems. To capitalize on the trend, the company allocated 45% of 2019 capital budget toward profitable midstream operations, which will bring in high margin and strong growth. Precisely, with its oil and gas pipeline network that is expected to reach 24,000 miles by 2020, the company is an industry leader in the midstream business.
It is strongly committed to return cash to its shareholders through dividend payments and repurchasing shares. Since inception, the company has returned more than $24 billion to its shareholders. Notably, it has been recently authorized to repurchase up to $3 billion of common stock.
Moreover, the International Maritime Organization — through the IMO 2020 — is planning to reduce the sulphur content in marine fuels, which will increase the demand for distillate fuels. Phillips 66, with updated refining assets, is well positioned for the upcoming change in regulations.
Other Stocks to Consider
Other top-ranked stocks in the energy space include Antero Midstream Corporation AM, CNX Resources Corporation CNX, and Contango Oil & Gas Company MCF. All these companies also carry a Zacks Rank #2.
Antero Midstream’s bottom line for the current quarter is expected to rise 120% year over year.
CNX Resources’ 2019 earnings per share have witnessed three upward movements and no downward revision in the past 30 days.
Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.
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