Key Insights
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The strong rally in fuel markets puts refinery stocks in spotlight.
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The leading refinary stocks like Marathon Petroleum, Valero Energy and Phillips 66 are trading at yearly highs.
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While this year’s rally was strong, these stocks are trading at 12 – 14 forward P/E.
As gasoline markets stay bullish, U.S. refinery stocks keep moving higher. Despite the huge rally in 2022, these stocks continue to trade at reasonable valuation levels.
Marathon Petroleum
Shares of Marathon Petroleum have recently settled above the $100 level and tested new all-time high levels. The stock is up by more than 50% year-to-date, but it remains reasonably valued.
Analysts expect that Marathon Petroleum will report earnings of $9.58 per share in the current year and $7.48 per share in the next year, so the stock is trading at less than 14 forward P/E.
It should be noted that analyst estimates are rising fast as the rally in the fuel markets is strong. Analyst estimates for the next year remain conservative, and they have more room for upside. In case longer-term estimates keep moving higher, Marathon Petroleum would gain additional upside momentum.
Valero Energy
Valero Energy is the second-biggest U.S. – listed refinery stock by market capitalization. Just like Marathon Petroleum, Valero Energy is trading at all-time high levels.
Currently, the stock is trading at 13 forward P/E, mostly in line with Marathon Petroleum, and enjoys the same positive catalysts.
Phillips 66
Unlike Marathon Petroleum and Valero Energy, Phillips 66 is not trading at all-time highs. However, the stock has also managed to gain strong upside momentum in recent weeks.
Analysts expect that Phillips 66 will report earnings of $8.63 per share in the next year, so the stock is trading at 12 forward P/E, which is a bit cheaper compared to Marathon Petroleum and Valero Energy.
In general, the market looks ready to buy a basket of leading refinery stocks, which would continue to move higher if fuel markets stay strong.
To keep up with the latest earnings updates, visit our earnings calendar.
This article was originally posted on FX Empire
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