Tesoro Corporation (TSO) — This energy company is one of the largest refiners and marketers of petroleum products in the United States. Although first-quarter earnings were negatively impacted by work stoppages in Washington and California and planned maintenance, the company reported record earnings in the second quarter. Earnings per diluted share soared more than 170% year over year to $4.62.
Credit Suisse Equity Research rates TSO stock “outperform” with a price target of $125.
And this week, Zacks Equity Research released 5 Reasons Why Tesoro (TSO) Should Be in Your Portfolio Now:
- Low oil prices should lead to a higher crack spread — the difference in crude prices and petroleum products at the pump or end-sale location.
- Strong earnings growth over the past few quarters with expected 2015 EPS growth of 74% compared to the industry average of 5.4%.
- The company’s policy of returning value to shareholders. In August, management increased its quarterly dividend by 18% to 50 cents per share, and it has reduced the number of shares outstanding by 15% over the past five years.
- A Zacks “buy” rank for TSO stock and a favorable Zacks industry rank of 39 out of more than 250 industries.
- Good-looking valuation metrics.
Despite a broad market sell-off, TSO stock has maintained a bull market, jumping from about $65 in January to over $110 in August. Since its recent high, TSO stock has pulled back on profit-taking to the support line of a bull channel at $90.
Major bull market support lies just below that line at the 200-day moving average at about $87. MACD is almost on a buy signal, and volume on both the buy and sell side is declining.
Buy TSO stock at $92 for a trade to $110 for a potential gain of 20%. Shares also currently throw off a yield of more than 2%.
