Valero Energy by Kopin Tan
Summary: Last week Valero Energy (VLO) reported a 30% rise in Q1 net and tripled its share buyback plan to $6 billion. Yet despite a 21% rally in share price since late February, Barron's The Trader thinks there's still more upside potential: Improving refining margins should remain robust 'for longer than most on Wall Street expect' as there are few signs of a drop in demand for gasoline despite high prices. Eitan Bernstein of Friedman Billings Ramsey notes that at 9.7x 2008e earnings, Valero is still the cheapest of the large refiners behind 10.8 for Sunoco Inc. (SUN) and 12.1 for Tesoro Corp. (TSO).
Related Links: Valero Energy Corp: The Hunt for Quality • Valero Energy Might Represent Buying Opportunity • Betting On Refiners: The Crude/Gas Price Disparity and the 3-2-1 Crack Spread
