If You Invested $1000 in Valero Energy 10 Years Ago, This Is How Much You'd Have Now
How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Valero Energy (VLO) ten years ago? It may not have been easy to hold on to VLO for all that time, but if you did, how much would your investment be worth today?
Valero Energy's Business In-Depth
With that in mind, let's take a look at Valero Energy's main business drivers.
San Antonio, TX-based Valero Energy Corporation is the largest independent refiner and marketer of petroleum products in the United States. The company was founded in 1980. It has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the United Kingdom.
Moreover, Valero is a leading ethanol producer with 14 ethanol plants in the Midwest that have a combined capacity of 1.73 billion gallons per year. The products of the company are sold in the markets of the United States, Canada, the United Kingdom, Ireland and Latin America. The company’s brand names are carried by around 7,000 outlets.
The company organizes its business through three reportable segments, namely, Refining, Ethanol and Renewable Diesel.
Refining: The Refining segment was responsible for 81.7% of the total margin in 2021. It includes refining operations, wholesale marketing, product supply and distribution, and transportation operations. This segment is segregated geographically into the Gulf Coast, mid-continent, West Coast and Northeast regions.
Ethanol: The Ethanol segment includes sales of internally produced ethanol and distillers grains. Operations of this segment are geographically located in the Central Plains region of the United States. This segment was responsible for 10.3% of the total margin in 2021.
Renewable Diesel: In the first quarter of 2019, the company created this segment. The Renewable Diesel segment incorporates the operations of a consolidated joint venture, Diamond Green Diesel. Notably, the renewable diesel plant is North America’s largest biomass-based diesel plant and it is located in Norco, LA. The segment provided 8% of the total margin in 2021, which was supported by the expansion of the Diamond Green Diesel plant.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Valero Energy ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in February 2012 would be worth $3,346.90, or a gain of 234.69%, as of February 24, 2022, and this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 209.91% and gold's return of 3.52% over the same time frame.
Analysts are anticipating more upside for VLO.
Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 3.1 million barrels per day in its 15 refineries located throughout the United States, Canada and the Caribbean. Valero’s Gulf coast presence helped it to expand export volumes over the past years and gain from high distillate margins. The company intends to quadruple renewable diesel production capacity by 2023. With the demand for renewable fuel expected to increase in the coming days, VLO is expected to capitalize on this. Through the December-end quarter, the company returned $401 million to stockholders as dividend payments. Also, being a producer of a significant amount of distillate fuel, Valero is expected to capitalize on the rising demand for the fuel. Consequently, Valero is considered a preferred energy firm to own now.
Over the past four weeks, shares have rallied 6.21%, and there have been 6 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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