Why Valero Energy Corporation, Phillips 66, and Vertex Pharmaceuticals Incorporated Are Today's 3 Worst Stocks

The dynamics of the oil and gas industry just got a big shake-up, sending ripples through the stock market today

Jun 25, 2014 at 7:21PM

Today investors learned that the U.S. economy was absolutely abysmal in the first quarter of 2014. Far exceeding even the most bearish estimates, gross domestic product actually contracted by 2.9% in the January-March period, the steepest setback since the depths of the recession in 2009. You'd think that the stock market would enter freefall mode on that revelation, but instead it was only a handful of stocks -- Valero Energy Corporation (NYSE:VLO), Phillips 66 (NYSE:PSX), and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) -- that were freefalling. The S&P 500 Index (SNPINDEX:^GSPC) actually managed to add 9 points, or 0.5%, to end at 1,959.

Valero Energy shed 8.3%, finishing as the worst performer in the 500-stock index Wednesday, as sudden, sweeping structural reforms that change 40-year-old rules on exporting oil hit shares of U.S. refiners. According to a Wall Street Journal report late yesterday, the Commerce Department is allowing several U.S. oil companies to export unrefined condensate oil overseas. That sort of exporting hasn't been allowed since the '70s, giving U.S. refiners a monopoly on the refinery business. Valero is strictly a refining and marketing company, so the decision clearly threatens its business.


Source: Phillips 66

Thankfully for Phillips 66 investors, this company is more diversified, engaging in the transport of oil and natural gas, producing chemicals, and hawking specialty products like solvents and waxes. That said, since its foundation nearly 140 years ago, Phillips 66 has evolved around its refinery business, so the news sent shares down 4.2% Wednesday. Its transportation business, for instance, often hauls gas that it has just refined to the end-customers. With oil producers now permitted to ship unrefined oil abroad without paying for any distillation process, Phillips 66 is still in a tough spot.

Lastly, shares of Vertex Pharmaceuticals fell 3.9% today. If you're a Vertex shareholder, odds are today's little stumble doesn't even register as a concern on the radar. That's because the stock soared a phenomenal 40% yesterday after data for its "TRAFFIC" and "TRANSPORT" trials met the company's goals. Vertex is trying to use a combination of its cystic fibrosis drug, Kalydeco, and another drug, lumacaftor, to gain approval from regulators to market the combo as a treatment that improves lung function in certain cystic fibrosis patients. The newest data make it look like such an approval is very likely to occur in the future.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Vertex Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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