Why CVR Refining Is Poised to Pop

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, petroleum refiner CVR Refining (NYSE: CVRR  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at CVR Refining and see what CAPS investors are saying about the stock right now.

CVR Refining facts

Headquarters (founded)

Sugar Land, Texas (2012)

Market Cap

$3.8 billion 

Industry

Oil and gas refining and marketing

Trailing-12-Month Revenue

$7.5 billion

Management

CEO John Lipinski (since 2012)

CFO Susan Ball (since 2012)

Trailing-12-Month Operating Margin

9.4%

Cash/Debt

$79.6 million / $727.0 million

Competitors

Murphy Oil

Tesoro

Valero Energy

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, all 12 of the members who have rated CVR Refining believe the stock will outperform the S&P 500 going forward.

Earlier today, one of those Fools, JFJ5000, listed several of the stock's positives for our community: "Massive dividend, big money insider buying at IPO, parent company has history of strong management and big gains, diversified client base, vertically integrated infrastructure, and primed to rake in potentially huge oil/shale refining profits in the near future ... need I say anything more?"

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, CVR Refining may not be your top choice.

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Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 27, 2013, at 11:56 AM, ferdiefor wrote:

    Did anyone read the red herring? When the spreads between WTI and Brent close their distribution capacity will close too. Anyone know what Seaway Pipeline is.... the eventual ticket to materially closing that gap.

    The timing of this IPO, IMO, is nothing more than to get maximum value based upon a level of distribution that is mostly based on spreads that will eventually close to a point where the overall distribution will be materially lower.

    Why does anyone think that CVRR would sell at $25.70 if it could maintain annual $5.00+ distributions for years and years.

    The risk of ownership has been gamely and timely transferred to public shareholders. Don't think Carl Icahn was sending any signal about value because he purchased $100M worth of CVRR. He can hedge that position and protect his downside while he starts to steadily liquidate his larger position.

    Remember, Carl Icahn is only out for Carl Icahn and I say he is willing to put $100M in the create a perception that will be bought into by those that will in time realize they are bagholders receiving low enough distributions AND still holding the risk associated with refineries the investment makes zero sense.

  • Report this Comment On January 28, 2013, at 7:59 AM, NuitStGeorge wrote:

    I don't think Murphy, Tesoro, and Valero are competitors...unless they have 'mobile' refineries and are on their way to Coffeeville. Lack of refining capacity in the region is one of the pluses.

    As for ferdiefor's "Why does anyone think that CVRR would sell at $25.70 if it could maintain annual $5.00+ distributions for years and years.",

    It may be like the S&L convesions in the seventies and eighties. They were all priced at a discount to the market so people would buy them, and sure enough, it was found money...for awhile.

  • Report this Comment On January 28, 2013, at 10:21 AM, jrkirk wrote:

    I agree George, and in addition to the lack of refineries in the region, CVRR has 2 located close to Cushing, OK, and major sources of oil, with one able to refine some sour crude. The parent company also spun off a fertilizer MLP a couple of years ago, and it did well, coming in the mid teens, and currently selling around 29, while paying owners well during the gain. The by-product of the refinery in Coffeeville, is a major ingredient for the fertilizer business, also located in Coffeeville. Icahn could well decide to sell at some point, but he does own over 80% of the parent company CVR Energy, and is a board member. I don't mind getting in bed with Carl on this one, as it sure looks like a winner to me, just like UAN did when it came public.

  • Report this Comment On January 28, 2013, at 5:57 PM, dweisspt wrote:

    Is this article even correct? CVRR raised only 600 million in it's IPO. Yet the box above gives the market cap as 3.8 billion. Is the author confusing the IPO with the parent company or do I have my figures completely wrong. Based on the filing there were 24 million shares offered at $25 per share. How did the author get 3.8 billion?

    Disclaimer, I am long CVRR

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