Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

5-Star Stocks Poised to Pop: Valero

By Brian D. Pacampara, CFA - Updated Apr 6, 2017 at 9:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Market-trouncing returns could be written in this 5-Star.

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oil refining giant Valero Energy (NYSE: VLO) has earned a coveted five-star ranking.

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

Valero facts

Headquarters (Founded) San Antonio, Texas (1955)
Market Cap $15.2 billion
Industry Oil and gas refining and marketing
Trailing-12-Month Revenue $89.15 billion
Management

Chairman/CEO William Klesse

CFO Michael Ciskowski

Return on Equity (Average, Past 3 Years) (0.9%)
Cash/Debt $4.13 billion / $7.83 billion
Dividend Yield 0.8%
Competitors

BP (NYSE: BP)

Chevron (NYSE: CVX)

ExxonMobil (NYSE: XOM)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 4,538 members who have rated Valero believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars Grijandel and Staka, both of whom are ranked in the top 16% of our community.

Earlier this year, Grijandel tapped Valero as a particularly cheap pick: "The company is selling at an attractive price compared to cycle-average results and for the long term demand pressure and regulations against new facilities should help keeping the crack spread at high average levels."

In fact, Valero currently sports a paltry price-to-cash flow of 3.7. That represents a clear discount to integrated oil giants like BP (16.4), Chevron (6.1), and Exxon (7.8).

CAPS All-Star Staka offers a balanced look at the stock:

Positive:
- Inexpensive, close to tangible book value
- Next years P/E is an estimated 8
- Capacity reductions in the industry might keep crack spreads high for longer
- A small improvement in profit margins back to historical averages will go a long way to further bring down the P/E (or up the stock price)

Negative:
- Chart looks like roling over
- Cyclical, dependent on crack spreads

What do you think about Valero, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Valero Energy Corporation Stock Quote
Valero Energy Corporation
VLO
$70.94 (1.76%) $1.23
BP p.l.c. Stock Quote
BP p.l.c.
BP
$27.46 (2.06%) $0.55
Chevron Corporation Stock Quote
Chevron Corporation
CVX
$116.78 (2.07%) $2.37
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$61.84 (1.56%) $0.95

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.