Valero Energy Corp (NYSE:VLO)

CAPS Rating: 4 out of 5

North America’s largest independent petroleum refiner and marketer, Valero takes fuel from the distiller to the gas pump.

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Player Avatar FortressAssetMgm (< 20) Submitted: 1/25/2013 1:18:30 PM : Outperform Start Price: $36.65 VLO Score: +1.98

Valero (VLO) is one of the largest independent refiners in the U.S. Valero has 9 out of 11 of it's domestic refineries located in the Gulf Coast. As pipeline capacity and other infrastructure projects relieve the supply glut in Cushing, OK, discounted crude oil will flow south to the Gulf Coast. Valero is already expanding capacity and should realize gross margins more similar to Mid-Continent refiners like HollyFrontier.

Additionally, Valero is spinning off it's retail segment (i.e. gas stations). Current investors will be able to enjoy a healthy balance between strong retail sales and improved gross refining margins.

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