Valero Energy Corp (VLO-N)

Up 31% YTD. Gasoline is the strongest product within energy. Technically, this is overbought. Price targets are below the current share price, so the street is suspicious of this name.

Oil is rangebound at $70-80 and the refiners like this stability especially as we enter spring driving season.

He owned too much energy (12% of his portfolio and now 6%). Energy hasn't performed in the past 12 months.

Bearish on refineries at large. More capacity coming on line globally, namely Nigeria and Mexico. Medium-term outlook is not phenomenal. 

Trades at a low PE, but is a value trap and is highly cyclical. Their EPS leapt from $9.16 in 20167 to -$3.50 in 2020 to $29.11 last year! Up, down and up big. Has had a a partial share buyback. Today, share are hitting 5-year highs. However, future 2025 EPS estimates are sliding to less than half of 2022's peaks, because of less demand for oil and gas. Also, the existential long-term obstacle are EV's. Consider the massive clean-energy incentives in Biden's 2022 IRA. It's possible earnings have already peaked--big warning.

First, oil is under a lot of pressure now. Valero at $100 would mean crude at $50. Look at the end of each quarter to buy--buy according to timing, nor price.

FMV is $375. The 10-year picture sees it peaking at 2x book, and it now has to break through that ceiling. Market has memory, so it will take a lot of pressure to bust out. Not his favourite. Prefers Canadian to US stocks.

Well run, good pure play on refining. But you want to own refiners at beginning of cycle, when prices are low or going up, not now. Now you want to be in the integrated space.