Three Energy Stocks For Short-Term Investors

The news has extensive coverage of high gasoline and diesel prices. As you may have noticed yourselves, it’s not fun to go to the gas station right now. That is one reason I recommend refining stocks, which can rack up profits when fuel prices are high. Right now, refining stocks offer an opportunity to make quick profits—in as soon as a few weeks.

Three large, pure-play refining companies operate in the U.S. The market caps are surprisingly close:   

• Marathon Petroleum Corp (MPC): $134 billion market cap

• Phillips 66 (PSX): $117 billion market cap

• Valero Energy Corp (VLO): $128 billion market cap

While these three are up at least 150% year to date, an upcoming catalyst could give their share prices another nice boost.

Third-quarter earnings reports are coming up soon, and the three refining corporations are poised to deliver blowout earnings increases.           

Valero reports tomorrow, October 22. The Wall Street consensus is earnings of $21.13 per share. The company reported $12.54 per share for its second quarter and $4.22 for its first quarter. VLO has beaten estimates in its last four earnings reports. Despite the large share price gains, the stock trades at just 8.5 times the forward earnings estimate.

Phillips 66 reports on October 28. Forecast earnings are $11.83 per share, compared to $9.41 reported for the second quarter. PSX trades at 9.0 times forward earnings.

Marathon Petroleum reports on November 3. Forecast earnings are $25.37 per share, up from $17.73 reported in the second quarter. MPC trades at a P/E of 7.5.

If these three stocks exceed Wall Street’s estimates, as I expect they will, they could trigger a cascade of higher prices for all three stocks as each reports earnings.

I have had a refining stock in my Velocity Report portfolio for almost a decade. I think these are excellent long-term stocks. The current earnings setup lets you get in on quick gains with one or more of these stocks.