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The following is a list of seven top-performing commodity stocks that have outperformed the broader stock markets in last 3 months.

Ticker

Company Name

Last 3 Months' Gain

CLR

Continental Resources Inc.

21.90%

CXO

Concho Resources Inc.

18.28%

PXD

Pioneer Natural Resources Co.

18.57%

RRC

Range Resources Corp.

25.99%

SDRL

SeaDrill Limited

14.42%

VLO

Valero Energy Corp.

24.58%

WMB

William Companies Inc.

15.60%

I like Valero Energy the most among above stocks, and believe it can continue its outperformance going forward.

Valero Energy Corp. is the largest independent petroleum refiner in the United States. The company owns and operates 13 refineries in the U.S., Canada and Aruba, and has total throughput capacity of 2.6 million barrels per day. Valero also operates around 1,400 retail sites under the Valero, Diamond Shamrock and Ultramar brands. Valero offers the most diversified refinery base out of all the other independent refiners, with a footprint in all major regions of the US.

A key factor which differentiates Valero and with other refiners is the high complexity of Valero’s refining facilities. High complexity allows Valero to refine cheaper and heavy crude oil, which is available at a discount to WTI. Around 50% of VLO’s feedstock consists of heavier crude. This helps company’s margins and as economy slowly recovers and crude price remains high, complex refiners like Valero will make substantially higher margins as compared to others. I believe, in the medium to long term, complex refiners like Valero should get a higher multiple than others, which is not the case currently.

Valero recently reported better than expected earnings and management tripled dividend payment and share repurchases. This shows managements willingness to share the positives of company’s growth with investors. VLO is also investing in some high-EBITDA generative hydrofrackers' facilities that will come on-stream in 2H2012/early 2013. Though these investments will likely dent earnings in 2012, it will be a big tailwind for 2014-15. I believe market is significantly underestimating company’s normalized earning power (2014e) and would recommend buying the stock from a medium term perspective.

Here are some of the basics about other companies on the list.

Continental Resources Inc. is an independent crude oil and natural gas exploration and production company with operations in the North, South and East regions of the United States. It focuses its exploration activities in new or developing plays that provide the company the opportunity to acquire undeveloped acreage positions for future drilling operations.

Continental Resources’ EPS forecast for the current year is 2.53 and next year is 3.24. According to the consensus estimates, its top line is expected to grow 51.70% current year and 31.00% next year. It is trading at a forward P/E of 20.46. Out of 22 analysts covering the company, 13 are positive and have buy recommendations, one has a sell recommendation and eight have hold ratings.

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The company’s core operating areas are located in the Permian Basin region of Southeast New Mexico and West Texas, an onshore oil and natural gas basin in the United States.

Concho Resources’ EPS forecast for the current year is 4.04 and next year is 5.58. According to the consensus estimates, its top line is expected to grow 71.00% current year and 25.70% next year. It is trading at a forward P/E of 17.85. Out of 27 analysts covering the company, 18 are positive and have buy recommendations and nine have hold ratings.

Pioneer Natural Resources is a holding company. It is an independent oil and gas exploration and production company with existing operations in the United States and South Africa. It explores, develops and produces oil and gas reserves.

Pioneer Natural Resources’ EPS forecast for the current year is 3.35 and next year is 4.27. According to the consensus estimates, its top line is expected to grow 35.10% current year and 26.00% next year. It is trading at a forward P/E of 20.75. Out of 29 analysts covering the company, 22 are positive and have buy recommendations and seven have hold ratings.

Range Resources Corporation is an independent natural gas and oil company. The company is engaged in the exploration, development and acquisition of primarily natural gas and oil properties, mostly in the Appalachian and Southwestern regions of the United States.

Range Resources Corp’s EPS forecast for the current year is 1.04 and next year is 1.46. According to the consensus estimates, its top line is expected to grow 23.20% current year and 26.80% next year. It is trading at a forward P/E of 48.71. Out of 40 analysts covering the company, 19 are positive and have buy recommendations, one has an underperform and nine have hold ratings.

SeaDrill Limited is a Bermuda-based company active in the oil and gas industry. The company operates a fleet of 60 units comprising drill ships, jack-up rigs, semi-submersible rigs and tender rigs for operations in shallow to ultra-deepwater areas. The company’s customers are national, international and independent oil companies.

SeaDrill Limited’s EPS forecast for the current year is 2.88 and next year is 3.28. According to the consensus estimates, its top line is expected to grow 3.10% current year and 8.00% next year. It is trading at a forward P/E of 10.68. Out of 15 analysts covering the company, eight are positive and have buy recommendations and seven have hold ratings.

Williams Companies, Inc. is an integrated natural gas company focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard and the Marcellus Shale in Pennsylvania.

Williams’ EPS forecast for the current year is 1.50 and next year is 1.72. According to the consensus estimates, its top line is expected to grow 8.70% current year and 6.60% next year. It is trading at a forward P/E of 18.19. Out of nine analysts covering the company, eight are positive and have buy recommendations and one has a hold rating.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 Top-Performing Commodities Stocks