Buy Alert: Valero Energy Corp (VLO)

By Jim Pearce • October 18, 2016

TRADE INSTRUCTIONS
Date: October 18, 2016
Name: Valero Energy Corporation
Symbol: VLO
Type: Open
Limit: Buy below $57

TRADE TARGETS
Holding Period: 3 months
Target Return: 11.6%
Annualized Return: 46%
Stop Loss Level: $47

TRADE RATIONALE

Valero Energy Corporation, through Valero Energy Partners LP (VLP), owns, operates, develops and acquires crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. The Company operates in two segments: refining and ethanol. Its refining segment includes refining and marketing operations in the United States, Canada, the United Kingdom, Aruba and Ireland. Its ethanol segment includes ethanol and marketing operations in the United States.

Like many energy stocks, VLO’s share price peaked a year ago above $70 before succumbing to plummeting oil prices last winter. Buts its refining operation helped soften the blow, since low input prices improve profit margins in that segment of its business. After bottoming out below $48 three months ago, VLO has gradually worked its way back up the charts, recently trading in a fairly narrow range around the $55 level.

Our Rapid Profits Matrix issued this alert based primarily on Valero’s very favorable “PEG ratio” of 0.37, which compares its trailing PER (price to earnings) of 8.7 to the average rate of growth in its earnings per share of 23.7% over the past five years. Even after adjusting for Valero’s higher forward PER of 10.4, its PEG ratio remains a very healthy 0.43, which is well below the 1.0 threshold employed by legendary mutual fund manager Peter Lynch to identify undervalued growth stocks.

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black arrow

10/18/16 ‐ 10:01am ET October 18, 2016 at 10:01am ET

Thank you Jim Pearce
executed VLO at 54.48
We will be doing well when it breaks resistance of the 50 day moving avg and then it becomes support.

I am very psyched today pulled the trigger on BMA
Have a great day

black arrow

10/18/16 ‐ 10:30am ET October 18, 2016 at 10:30am ET

Hi Boss,
Wanna keep smiling like in your picture? Check out the chart of VLO it has already crashed through the 50 day MA!! http://schrts.co/zbR4ru
got my pulled pork cooking for after todays soccer game.
back to boring tax stuff
I am having fun thanks to Systematic Wealth

Jim Pearce

10/18/16 ‐ 5:25pm ET October 18, 2016 at 5:25pm ET

Yes it did. Upper Bollinger Band is between $56 – 57, so let’s see if it busts through that!

Alpha_Dog_510

10/19/16 ‐ 1:33pm ET October 19, 2016 at 1:33pm ET

I waited for VLO to dip below $54.50 before buying.

Thank you Jim

Abhijit D

10/24/16 ‐ 1:30pm ET October 24, 2016 at 1:30pm ET

I missed it last week. Is it still a good buy now? considering earnings are tomorrow.

Jim Pearce

10/24/16 ‐ 2:04pm ET October 24, 2016 at 2:04pm ET

Hi Abhijit. Although VLO has been trending up the past few days, it is still below our buy limit price of $57 so you are okay to buy it.

Arun Verma

10/25/16 ‐ 2:54pm ET October 25, 2016 at 2:54pm ET

I bought VLO at $54.54. Do you think its good time to sell since the earnings are out today? Is there any more upside? Thanks.

Jim Pearce

10/25/16 ‐ 5:03pm ET October 25, 2016 at 5:03pm ET

We got a great bounce today on VLO, but it is still below our target price so I am going to hang on to it a bit longer. But if you are happy with your gain, then feel free to lock it in. As a wise man once said, you’ll never go broke making a profit! 🙂

black arrow

10/26/16 ‐ 7:38am ET October 26, 2016 at 7:38am ET

Hi Arun,
You ask if there is more upside to VLO. I wondered if you have perused Finance yahoo? I just looked it up on Yahoo, one year target estimate is 64.53. We are 4entering the best months of the year for stocks. The write up says the holding period of VLO is 3 months. Finally here is a suggestion which is free and can be helpful. Have you heard of seasonality? Here is a link to a seasonality chart. http://stockcharts.com/freecharts/seasonality.php?symbol=vlo. Of course Jim Pearce gave a great answer!- not to mention a great stock selection.

Arun Verma

10/31/16 ‐ 8:26pm ET October 31, 2016 at 8:26pm ET

Hi Black Arrow,

Thanks for your insight. It is very helpful.

Arun

black arrow

10/31/16 ‐ 9:15pm ET October 31, 2016 at 9:15pm ET

Arun,
If we help others we help ourselves as well.

Jim Pearce

11/14/16 ‐ 11:30am ET November 14, 2016 at 11:30am ET

Now that we have exceeded our target gain in VLO, I have raised my stop loss price for it to $60.50 to lock in most of that profit to protect us if we get a pull back later this week after last week’s unexpected rally following the election. The stock is trading above its upper Bollinger Band, and well above its 50DMA so from a technical perspective it appears at risk of a minor sell-off in the near term. But we’ll keep riding it higher if that is what the market gives us, so I’ll let you know if we decide to close out this position. Stay tuned.

Jim Pearce

11/17/16 ‐ 10:12am ET November 17, 2016 at 10:12am ET

This morning I raised the stop loss on VLO to $63.75, which is slightly above our target price of $63.60. I’ll keep riding it up as far as it will go, and will continue moving the stop loss up closely behind it. I don’t know how much more upside potential is left in the stock as it is trading way above its 50DMA and very close to its upper Bollinger Band, so don’t be surprised if this position is closed out before the end of this month.

Janis Bell

11/17/16 ‐ 10:49pm ET November 17, 2016 at 10:49pm ET

I just put through a stop order for this at your recommended price, but the small print read that they would not guarantee this price, that the trade could take place at any amount whenever the stop was triggered. So is there a way to protect yourself from selling at, say 60, if there is a sudden overnight drop in price?

Jim Pearce

11/18/16 ‐ 9:35am ET November 18, 2016 at 9:35am ET

That is correct. A standard stop order converts to a market order once the stock trades at your stop price, but there is no assurance that the next trade “at the market” will be at your price. For that reason, you may enter a stop/limit order which stipulates that your stock only be sold at your specified price once the stop price is hit, but there is also no assurance that will happen, either. The only way I know of to be certain of being able to sell the stock at a specific price is to buy a put at that exercise price, but of course there is a cost associated with that (sort of like paying an insurance premium to protect against a big loss).

Jim Pearce

11/18/16 ‐ 9:50am ET November 18, 2016 at 9:50am ET

Janis – based on VLO’s weak opening this morning, I just issued a sell alert so this is now a moot point. If you entered a stop loss order with your broker at my recommended price yesterday then it should have already been executed this morning. If you did not, then you will need to enter a sell order to do so.

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