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Valero Energy (VLO) Stock Jumps 28.4% YTD: More Room to Run?

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·3 min read
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Valero Energy Corporation’s VLO shares have jumped 28.4% year to date (YTD) compared with the industry’s 25.1% rally. The Zacks Rank #3 (Hold) company has witnessed upward estimate revisions for 2022 and 2023 earnings in the past 30 days.

Zacks Investment Research
Zacks Investment Research


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Factors Favoring the Stock

With economies reopening as the coronavirus cases have dropped considerably, the global demand for fuel has recovered significantly. Valero Energy, having its petroleum refineries spreading across the United States, Canada and the U.K., is well-positioned to capitalize on the mounting fuel demand. Valero Energy is a well-known company that provides finished products such as gasoline, diesel fuel, heating oil and jet fuel.

VLO has significant growth potential, backed by its lucrative renewable diesel business. In a joint venture with Darling Ingredients Inc., Valero Energy is the second-largest renewable diesel producer in the world. With the engines and infrastructure used at present times, renewable diesel is 100% compatible.

Compared with composite stocks belonging to the industry, Valero Energy has been rewarding investors with higher dividend yields. Along with maintaining investment-grade credit ratings, Valero Energy is committed to rewarding shareholders with a sustainable and growing dividend.

Considering all these factors, it is expected that Valero Energy has more room to run.

Stocks to Consider

Some better-ranked players in the energy space are Exxon Mobil Corporation XOM, EOG Resources EOG and Chevron Corporation CVX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil is banking on key upstream projects centered around Permian, the most prolific basin in the United States, and offshore Guyana resources.

ExxonMobil reported strong fourth-quarter results, owing to improved realized oil and natural gas prices, as well as higher refining and chemical margins. In the past 30 days, ExxonMobil has witnessed upward earnings estimate revisions for 2022.

For this year, EOG Resources has laid out a plan to generate $6.4 billion in free cash flow at a West Texas Intermediate crude price of $80 per barrel. EOG Resources has also committed $1.7 billion in regular dividend payments.

With the employment of premium drilling, EOG Resources is reducing cash operating costs per barrel of oil equivalent, aiding the bottom line.

In the Permian basin, Chevron has a strong footprint. The majority of Chevron’s assets in the most prolific basin of the United States has minimal royal payments, securing handsome cash flows for the company in the long run.

In the past 30 days, Chevron has witnessed upward earnings estimate revisions for 2022.


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Chevron Corporation (CVX) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Valero Energy Corporation (VLO) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

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