Use access key #2 to skip to page content.
$37.09 -0.83 (-2.19%)
7/3/2008 1:00 PM

Valero Energy Corp (VLO)

CAPS Rating:
****

The company owns and operates 18 refineries located in the United States, Canada, and Aruba that produce premium, environmentally clean refined products such as RBOB. It also produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals.

View All Commentary (VLO)

Recs

17

Avatar jwaydog (33.64) Submitted: 4/03/08 12:47 PM : Outperform Start Price: $52.15 VLO Score: -21.00

Refiners have been beaten down recently due to decreasing margins (crack spread) and a perceived decrease in demand for gasoline due to a weakening economy. I believe oil prices will pull back as money flow from commodities comes back into equities. Gasoline demand will not decrease! Wall street types do not have the pulse of the average driver. The street seems to believe everyone is out for joy rides in the suv. Driving is not a luxury. In the past year most consumers have already curtailed needless trips in the car thus gas consumption will not fall into this summer compared with last. Sixty percent of valero's throughput is sour crude which is supplied mostly from the north american continent. Processing sour is a competitive advantage. Most refiners cannot handle sour. If for some reason the flow of sweet from the arab region were disturbed valero would stand to gain immensely. Americans simply have not yet invested in significantly more fuel efficient cars and until we do gasoline demand will not decrease regardless of economic downturns.

Report this Post Replies: 3 | Reply

Avatar jwaydog (33.64) Submitted: 4/22/08 12:19 PM

Recs: 0 | Rec This

4.22.08 posted by jwaydog
I should disclose that I have some real skin in the game...1,600 shares....a result of continuous averaging down. This level of ownership is much larger than I had originally anticipated but I try to invest in companies which I can feel comfortable in adding shares at a lower prices. VLO has stressed me immensly in its continuous descent since I started buying on 3/6/08 at $54.40. My belief that our government would help restore the value of the dollar (american peso) and thus stem the flow of money into oil has been shattered. With gasoline at $3.00 heading into the summer season and a pullback of oil into the $90s, VLO would have made a pile of money. This, it seems, will not be the case. However, VLO stock seems to be doing quite nicely lately regardless of $118 oil. VLO's resiliency is impressive.

Report this Post Reply

Avatar jgseattle (91.96) Submitted: 5/21/08 12:43 AM

Recs: 0 | Rec This

I had the same idea as jwaydog. However, so long as the price of crude is increasing faster than the price of refined products VLO is in trouble. I really like VLO in the long term but for now I think the main issue is the crack spread and it is not due to a decrease in demand or a weaking economy it is all about where crude prices go.

I agree with jwaydog about VLO ability to process sour crude and on top of that VLO is the largest independent refiner so when thing turn VLO is going to be the place to be, just not now.

Report this Post Reply

Avatar zoiebelle (29.34) Submitted: 6/04/08 9:42 PM

Recs: 0 | Rec This

Smart and experienced management, investment in better technology, more capacity coming online, and a more secure/stable crude supply. Plus they are getting rid of "loser" refining acquisitions, and have an expanding market footprint at the retail level. I love covered calls on VLO.

Report this Post Reply

Featured Broker Partners