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$25.32 0.56 (2.26%)
10/10/2008 4:02 PM

Sunoco, Inc. (SUN)

CAPS Rating:
***

The Company, through its subsidiaries, is a petroleum refiner and marketer and chemicals manufacturer with interests in logistics and cokemaking; petroleum refining and marketing operations include the manufacturing and marketing of petroleum products.

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Avatar TMFDeej (99.44) Submitted: 6/25/08 1:36 PM : Outperform Start Price: $39.24 SUN Score: 8.74

I'm always fascinated with companies that are trading at such a depressed level that one can argue their break-up value is greater than their current stock price. Credit Suisse believes that it has found one of these sum of the parts is greater than the whole situations in Sunoco (SUN). Refiners have been absolutely crushed lately as their crack spreads (the difference between the cost of oil and what they can sell gas for aka the amount of money that they make) have deteriorated. Things are so bad for the company right now that this analyst reduced their '08 earnings estimate for SUN from $1.25 to $0.38. Ouch.





Still, Credit Suisse contends that Sunoco's chemicals, gas station, logistics, refining, and coke businesses when evaluated looking at the prices that are being paid for refineries right now and the cashflow multiples that similar businesses are trading at are worth between $97 and $45 per share. This is a significant premium to the $39.50 or so that SUN is currently trading at. Unless we se a dramatic plunge in the price of oil, refiners and chemical companies probably have further to fall, but I think that I'm going to take a flier on SUN in CAPS both for the attractiveness of its assets and to act as a hedge in case oil does drop.





Deej

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Avatar nuf2bdangrus (< 20) Submitted: 6/26/08 10:31 PM

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I bought calls in June on SUN, and STUPIDLY didn't cash in when they doubled, not even taking my cost basis out...they plunged quickly, and in hope refiners would bounce, I waited, They expired worthless. My July calls are fading. That said, I have traded the stock against them and made some $. The stock seems to have a solid bottom at 38 ish, if it opens below, it quickly trades up to it. Any pullback in oil and this runs to 40. I sold my oil stocks very early in the runup, in some cases missing the runup completely. What a shame. At this point, the charts on energy are parabolic, and I am afraid to take new long positions. I am awaiting the shakeout, and it will come. The likelyhood of a currency intervention, congressional action, or sales from SPF to shake out new longs in increasing with each day. A pullback of 20% likely, I am awaiting that event to re enter to energy space. I do like SUN as a hedge, as well as a long term investment. Although I am trading the stock,I will take a small position on a panic selloff to 34.

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