Sunoco, Inc. (NYSE:SUN)

Option1307 (30.62) Submitted: 2/24/2010 4:44:38 PM : Start Price: $25.40 SUN Score: +71.59

You know when you go to Disneyland and you get that flutter in your heart and your eyes light up with excitement? Ya, me neither as I can't stand the crowds there. But I could imagine that if I actually had that feeling it would be much the same as I feel for Sunoco (SUN) right now.

Refiners are truly interesting creatures, they can be cash cows for several years and then get destroyed and loose money with the best of them. Check out some past stats. on SUN to see what I mean:

2006: Revenue of 36B, EPS = 7.59
2007: Revenue of 42B, EPS = 7.43
2008: Revenue of 52B, EPS = 6.63
2009: Revenue of 28B, EPS = -3.16 (yes, negative!)
2010 Est.: 1.07 EPS
2011 Est.: 2.67 EPS

Currently all refiners have been getting beat with the ugly stick on a daily basis, the sector has been beat up and pushed around for the better part of the last two years and their stock prices reflect this tend. Crack spreads are still at extremely low levels, thus profit margins are in the trash (see here for more details on spreads/etc.: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=219753&t=01002756778892789413). However, this trend will only last for so long and the end is quickly approaching.

Yes they have some debt, but that is nothing to be too concerned with. All they have to do is hold out for a few more quarters at most before the money tree returns and earnings flourish once again.

This likely won't be a quick play, but in 2-5 yrs. when SUN is earning 3,4 even 7 dollars a share, you'll be happy you scooped some up when you did. Patience is key.