Barron's: Phillips 66 isn't getting enough credit for fast-growing chemicals unit

|About: Phillips 66 (PSX)|By:, SA News Editor

Phillips 66 (PSX) has more than doubled since its May 2012 spinout from ConocoPhillips, but Barron's Dimitra Defotis suspects the stock has more upside ahead.

She thinks the market doesn't fully recognize the value of PSX's chemicals business, and that both chemicals and the midstream transportation business are likely to grow because of cheap natural gas and gas liquids, supporting margins and cash flow.

Even though non-refining businesses account for 40% of profits, PSX is typically lumped in with other pure-play refiners; independent U.S. refiners are trading at ~10x estimated 2014 earnings, while chemical companies command a much higher multiple.