Valero (VLO) Offering Possible 24.69% Return Over the Next 6 Calendar Days

Valero's most recent trend suggests a bullish bias. One trading opportunity on Valero is a Bull Put Spread using a strike $76.50 short put and a strike $71.50 long put offers a potential 24.69% return on risk over the next 6 calendar days. Maximum profit would be generated if the Bull Put Spread were to expire worthless, which would occur if the stock were above $76.50 by expiration. The full premium credit of $0.99 would be kept by the premium seller. The risk of $4.01 would be incurred if the stock dropped below the $71.50 long put strike price.

The 5-day moving average is moving up which suggests that the short-term momentum for Valero is bullish and the probability of a rise in share price is higher if the stock starts trending.

The 20-day moving average is moving up which suggests that the medium-term momentum for Valero is bullish.

The RSI indicator is at 68.15 level which suggests that the stock is neither overbought nor oversold at this time.

To learn how to execute such a strategy while accounting for risk and reward in the context of smart portfolio management, and see how to trade live with a successful professional trader, view more here

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LATEST NEWS for Valero

5 “Discounted” Oil Stocks to Buy After a Tough 2018
Thu, 10 Jan 2019 16:20:20 +0000
Amid the uproar over the wildly unstable markets, the usual suspects like technology or retail garnered the most attention. However, the deterioration in oil stocks presents one of the more troubling economic indicators. While drivers appreciate the discount at the pump, a deflated energy sector typically means a slowdown in commerce.

That said, the benchmark indices have witnessed a sharp rise in sentiment. For instance, the Dow Jones Industrial Average has gained over 3% this month. Likewise, oil and energy stocks have benefited the most from the resurgence. West Texas Intermediate is up over 14% in January, while the international benchmark Brent Crude Oil jumped 13%.

Still, I'd take a cautious approach to oil & gas stocks at this juncture. Countries awash in "black gold," such as Saudi Arabia, are attempting to diversify their economies away from commodity dependency. They know firsthand the threat that suddenly declining prices pose. Further, efforts to artificially raise demand with production cuts have failed.

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But on the flipside, energy stocks offer longer-term opportunities, if you know where to look. A major oversight is the focus on quantity and not quality. For example, shale-derived oil is too light to meet industrial demand for diesel. Therefore, demand for midstream and downstream oil stocks can jump when the supply of appropriate commodities dwindles.

Under the current environment, upstream oil & gas stocks present challenges. However, this segment shouldn't be ignored. Proven companies that profit from their exploration dollars could move higher, especially if the newfound bullishness in oil sustains itself.

* 10 Key Emerging-Market Stocks to Buy for Contrarian Investors

Undoubtedly, this is a tricky segment. But if you have the nerve, here are five oil stocks to consider:

### BP (BP)

Source: Mike Mozart via Flickr

Drilling for oil is a centuries-old business. As such, it's easy to think that the industry remains an unsophisticated, crude affair, no pun intended. However, energy stocks are rapidly becoming dependent on innovative technologies, with BP (NYSE:BP) lending a recent example.

A few days ago, BP announced that it discovered one billion barrels of crude in the Gulf of Mexico. Specifically, the company hit pay dirt at its Thunder Horse field, which is located off the tip of Louisiana.

But what made this announcement distinct was how BP made its discovery: Using advanced seismic technology and data processing, BP accelerated its analytics. Management stated that using prior-generation tech, the Thunder Horse finding would have taken years. Now, it takes just weeks.

Of course, upstreaming is risky in a volatile market due to the expenses involved in exploration efforts. But BP's seismic tech sounds like a gamechanger that separates it from lesser oil stocks.

### Kinder Morgan (KMI)

Source: Roy Luck via Flickr

Part of the complexity involved in assessing energy stocks is the underlying product diversity. For instance, different oil viscosities lend to variances in performance and functionality. At its most elemental level, oil and gas products serve specific needs. Understanding these nuances can help navigate you toward the best investment.

With that in mind, if I had to make a pick among oil & gas stocks, I'm putting Kinder Morgan (NYSE:KMI) on my short list. In recent years, natural gas production has skyrocketed in the U.S. This has created a viable market that didn't previously exist in such scale.

As a result, Kinder Morgan's midstream operations should continue to enjoy long-term demand. While KMI has exposure up and down the supply chain, its network of gas pipelines primarily rings the cash registers. Loosely speaking, the company operates a subscription business model: clients pay KMI based on the amount of gas sent through the pipelines.

* 10 Stocks You Can Set and Forget (Even In This Market)

No matter what happens to natural gas prices, transportation of energy-related commodities will remain a vital business venture.

### Magellan Midstream Partners (MMP)

Source: Tony Webster via Flickr

Over the last few volatile years, most oil stocks simply operated on survival mode. After absorbing devastating losses in 2014 and 2015, most sector players' financials look understandably awful.

On the other hand, we have exceptions like Magellan Midstream Partners (NYSE:MMP). Since 2015, MMP has provided consecutive annual revenue growth, and momentum remains strong. In its most recent quarter, MMP delivered sales of $638 million, up over 11% year-over-year. Moreover, the company generates consistently positive free cash flow and features a fairly stable balance sheet.

Despite the general wildness in oil stocks, MMP should continue to deliver the goods. Management is eyeing overall growth, as evidenced by the constant expansion of its refined-petroleum products pipeline in Texas. More importantly, the organization is broadening its scope while emphasizing fiscal discipline.

### Valero Energy (VLO)

Source: Mike Mozart via Flickr

Even compared to other troubled energy stocks, Valero Energy's (NYSE:VLO) precipitous downturn surprised many observers. After putting up outstanding numbers throughout most of 2018, the final quarter proved insurmountable. Between the beginning of October and the end of December, VLO had sunk 34%.

But for current speculators, the extreme bearishness in Valero shares have taken down significant risk. For starters, we have to go back to November 2017 to see prices this low. More importantly, management has sparked a fiscal revival. Thanks to key acquisitions, Valero's revenue and profitability metrics have improved dramatically since 2016.

* 7 Stocks at Risk of the Global Smartphone Slowdown

I see more of the same in 2019, especially with its merger with Valero Energy Partners. Overall, the organization has solid financial standing, which has proven valuable in terms of shareholder payouts.

### Occidental Petroleum (OXY)

Source: Hayden Irwin via Flickr

Like other energy stocks, Occidental Petroleum (NYSE:OXY) incurred a disjointed year in 2018. In the first half, OXY appeared very promising, gaining over 15%. Unfortunately, sector turbulence combined with a broader market meltdown cratered the company.

After the dust settled, OXY had shed more than 13% last year. Still, I wouldn't rule out a comeback. Since hitting a sales bottom in 2016, Occidental has been on a tear. Prior acquisitions have proved vital, with OXY returning to annual profitability in 2017, and is on course for a repeat performance in 2018.

Moreover, the leadership team have anticipated multiple oil-pricing scenarios. Should a barrel of crude drop to $40, OXY asserts that it can pay its dividends, and not overspend its cash flow. The sector is volatile, but I doubt that it will get that bad. Therefore, OXY presents an intriguing contrarian case.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

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Valero wraps $950M deal to absorb affiliated pipeline, storage terminal company
Thu, 10 Jan 2019 15:42:40 +0000
San Antonio-based Valero Energy Corp. has completed its merger with a subsidiary that owns and operates pipelines and storage terminals, the company announced Thursday morning. Parent company Valero (NYSE: VLO) announced in Octoberits plans to buy logistics arm Valero Energy Partners LP at $42.25 per share. The master limited partnership, or MLP, owns and operates pipelines and storage terminals in Texas, Oklahoma, Louisiana and Tennessee that support Valero refineries.   The closing of the merger comes after a strong third quarter for the parent company and its MLP, which reported $141 million in revenue.

Analysts’ Ratings: Marathon Petroleum and Phillips 66
Thu, 10 Jan 2019 15:30:02 +0000
MPC, VLO, HFC, and PSX: Q4 Estimates and Rankings

(Continued from Prior Part)

## Analysts’ ratings

HollyFrontier (HFC), Phillips 66 (PSX), Marathon Petroleum (MPC), and Valero Energy (VLO) are covered by 16, 18, 17, and 19 Wall Street analysts, respectively. Among the analysts, 31%, 56%, 100%, and 63% rated HollyFrontier, Phillips 66, Marathon Petroleum, and Valero Emergy as a “buy,” respectively. In this part, we’ll discuss analysts’ ratings for Marathon Petroleum and Phillips 66.

## Marathon Petroleum

Marathon Petroleum is growing due to its capex and acquisitions. The company’s latest acquisition was Andeavor. Wall Street analysts expect the company’s earnings to increase 34% in 2018 and 42% in 2019. Marathon Petroleum will likely benefit from merger synergies and growth activities.

Marathon Petroleum’s mean target price is $98 per share, which implies a 57% gain from the current level–the highest among its peers.

## Phillips 66

Phillips 66 is an integrated and diversified downstream company. During periods with lower refining earnings, other segments (like Midstream, Chemicals, and Marketing) contribute to the overall earnings and shield Phillips 66 from volatility in the refining environment. Phillips 66 plans to grow these segments through its capex and acquisitions. Phillips 66 has strong financials. The company has comfortable debt and a favorable liquidity position.

However, Phillips 66 trades at a premium to the peer average, which has led to mixed ratings for the company. Phillips 66’s mean target price is $121 per share, which implies a 32% gain from the current level.

Continue to Next Part

Browse this series on Market Realist:

* Part 1 – MPC, VLO, HFC, and PSX: Q4 Estimates and Rankings
* Part 2 – HollyFrontier’s Q4 2018 Estimates: Ranked First
* Part 3 – Phillips 66’s EPS Is Expected to Increase 126% in Q4 2018

Valero Energy Corporation and Valero Energy Partners LP Announce Completion of Merger
Thu, 10 Jan 2019 14:10:01 +0000
SAN ANTONIO, Jan. 10, 2019 — Valero Energy Corporation (NYSE: VLO) (“Valero”) and Valero Energy Partners LP (NYSE: VLP) (the “Partnership”) today announced the completion of.

Valero Energy’s Q4 2018 Earnings Are Expected to Fall
Thu, 10 Jan 2019 14:00:02 +0000
MPC, VLO, HFC, and PSX: Q4 Estimates and Rankings

(Continued from Prior Part)

## Valero Energy

In this series, we have ranked four refiners based on their estimated earnings growth YoY (year-over-year) in the fourth quarter. We reviewed HollyFrontier (HFC), Phillips 66 (PSX), and Marathon Petroleum’s (MPC) expected performance. HollyFrontier was first with 144% estimated earnings growth YoY in the fourth quarter, followed by Phillips 66 (with 126% earnings growth) and Marathon Petroleum (with 25% earnings growth). In this part, we’ll review Valero Energy’s (VLO) estimated earnings growth for the fourth quarter.

## Valero Energy’s fourth-quarter estimates

Wall Street analysts expect that Valero Energy could post an EPS of $0.9 in the fourth quarter. The estimate is 23% lower than the company’s adjusted EPS in the fourth quarter of 2017 and 56% lower than the adjusted EPS in the third quarter. In this series, Valero Energy is the only company that’s expected to post a YoY decline in its fourth-quarter earnings. Valero Energy’s revenues are estimated to be ~$25.3 billion in the fourth quarter—4% lower than its revenues in the fourth quarter of 2017.

Valero Energy’s lower earnings could be due to the expected fall in the company’s refining margin and earnings. Valero Energy’s crack indicators fell in three of its four operating zones in the fourth quarter—compared to the fourth quarter of 2017. In the fourth quarter, the US Gulf Coast crack and the North Atlantic fell 42% YoY and 33% YoY. The US West Coast crack indicator fell 11% YoY in the fourth quarter. These three regions accounted for 85% of the company’s total throughput in the third quarter. The fall in the crack indicators in these regions points toward a likely YoY fall in the company’s refining margin in the fourth quarter.

However, Valero Energy could benefit from the decline in RIN (renewable identification number) prices in the fourth quarter. According to data published by Valero Energy, ethanol RIN prices have fallen 84% YoY to an average of 13 cents per gallon in the fourth quarter. Biodiesel RIN prices have fallen 59% YoY to 39.5 cents per gallon in the fourth quarter. Lower prices could give Valero Energy a break. The company has been bearing compliance costs for quite some time.

Continue to Next Part

Browse this series on Market Realist:

* Part 1 – MPC, VLO, HFC, and PSX: Q4 Estimates and Rankings
* Part 2 – HollyFrontier’s Q4 2018 Estimates: Ranked First
* Part 3 – Phillips 66’s EPS Is Expected to Increase 126% in Q4 2018

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