Valero Energy Corp. (NYSE:VLO) is a petroleum refiner and marketer with several petroleum refineries in the United States, Canada and Aruba. Its refineries can produce conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants and other refined products, as well as a slate of premium petroleum-based products. It operates in three segments: refining, ethanol and retail.

Valero looks to be carving out a base at the $20 level, an area that has held over the past several months. The stock is also trading at a trough valuation, with a forward P/E of just over 5. The company also has over 5.00 per share cash, with a nearly 3% dividend yield. In the current low-growth equity environment, I favor value and yield over growth, and VLO fits the bill on both fronts.

With a conservative estimate of $4.50 per share in 2012 earnings (consensus estimate: $4.85) and a multiple of only 5.5, I look for VLO to move back toward the 200-day moving average of 24.50 by June expiration.

Based on VLO’s current market price of $20.81 and using a target price of $24.50, a target date of June 15, 2012, and $1,000 of investment capital,, this is an excellent candidate for capturing some nice upside by buying a June call spread, selling a June put spread or buying the stock at its current $21 level.

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