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5-Star Stocks Poised to Pop: Valero

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

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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

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%


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:

- 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)

- 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.

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Stocks Mentioned

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

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

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