Why Alon USA Energy’s Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Alon USA Energy (NYSE: ALJ  ) rose 10% today after getting the thumbs-up from an analyst.

So what: Goldman Sachs (NYSE: GS  ) initiated coverage on the stock today and gave it a buy rating and a $21 price target. Analysts at Goldman think the recent IPO of Alon USA Partners (NYSE: ALDW  ) and the continuation of the discount of WTI-Midland vs. WTI-Cushing will cause the stock to outperform.  

Now what: The market will sometimes react strongly to analyst ratings like this, but it doesn't change the investment thesis on the stock for the long term. The company's assets and earnings should drive the stock and with a forward P/E ratio of 12 and a 1.1% dividend, this is a reasonable buy for investors. If you're looking to get in, I'd wait until after this jump wears off in the next few days and investors can get a better deal.

Interested in more info on Alon USA Energy? Add it to your watchlist by clicking here.


 

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  • Report this Comment On January 01, 2013, at 3:02 AM, Double12months wrote:

    I Believe that the Distribution will amount to a lot more than 1% . With the actual crack spread, I would be surprised if it would be below $10.00 for this year.

    How did you come up with 1%.

  • Report this Comment On January 01, 2013, at 3:04 AM, Double12months wrote:

    Sorry, my mistake, wrong stock.

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