Houston Oil Trading Center
U.S. oil production is rising steadily just as
consumers are switching in droves from economy sedans to light
trucks and SUVs. Combined, those trends translate to higher gasoline
sales. That’s why analysts are forecasting good times ahead for
U.S.-based oil refineries.
refinery stocks have already moved up in price, analysts are
forecasting record earnings for at least the next two years. So
there’s still time to get in on the action. Nevertheless, given the
circumstances, I’ve emphasized minimizing risk when designing the
screen that I’m about to describe. As usual, I’ll use the FINVIZ
free stock screener to show you how to find refinery stocks worth
FINVIZ Stock Screener
Find the screener from the FINVIZ
homepage (https://finviz.com) by selecting
Screener. FINVIZ calls
its selection parameters “filters.” On the Filters bar, select “All”
to display the available filters. Then, for the filters that you
want to use, click on the associated dropdown menus to select from
the available filter values.
Establish Refinery Database
Since the positive conditions
mentioned above pertain specifically to U.S. refineries, start by
using the “Country” filter to limit your list to U.S. stocks.
Then use the “Sector” filter to
specify “Basic Materials” and the “Industry” filter to narrow your
list to “Oil & Gas Refineries.”
Market-capitalization is the value
of all of a firm’s outstanding (issued) shares.
Market-capitalizations can range from a few million to billions of
dollars. But, the smaller the stock, the higher the risk. So use the
Market-Cap filter and specify “+Mid,” to limit your list to Mid-cap
($2 billion) or larger stocks.
Working Smarter – Not Harder
Rather than getting out your
calculator and donning green eyeshades to analyze financial
statements, it’s easier to let large investors such as mutual funds
and banks to that heavy lifting. Do that by using the Institutional
filter and specifying “over 40%” which rules out stocks that the
“smart money” doesn’t like.
Continuing the “work smarter”
theme, specify “buy or better” using the Analyst Recommendation”
filter to preclude stocks that professional stock analysts aren’t
Next, specify “over 400K” using
the Average Volume filter to avoid stocks trading less than 400,000
shares daily, which are riskier than higher volume stocks.
Finally, using the Beta filter,
specify “under 1.5.” Beta is a volatility measure. Considerable
research has found that the higher the beta, the higher the risk.
My screen turned up four
U.S.-based refiners worth researching, but one recently agreed to be
• Andeavor (ANDV): Headquartered in
San Antonio, Texas, Andeavor owns 10 refineries and more than 3,000
gas stations. Pays 1.9% dividend yield. In April, Andeavor agreed to
be acquired by Marathon Petroleum (see below), so check out MPC
rather than ANDV.
• Detek US Holdings (DK):
Headquartered in Brentwood, Tennessee, owns six refineries, crude
oil and refined product pipelines, and 300+ retail store/gas station
combinations. Pays 1.7% dividend yield.
• Marathon Petroleum (MPC):
Headquartered in Houston, Texas, Marathon owns six refineries in the
U.S. Gulf Coast and Midwest regions. Also owns petroleum pipelines,
marine transportation facilities, terminals, storage facilities,
etc. Pays 1.1% dividend yield.
• Valero Energy (VLO): Headquartered
in San Antonio, Texas. Valero owns 15 oil refineries in the U.S.,
Canada, and the U.K. and 11 ethanol plants in the central U.S. Pays
a 2.9% dividend yield.
As always, consider the results to
any screen to be candidates for further research, not a “buy” list.
The more you know about your stocks, the better your results.