Valero Energy Corporation (VLO) — I featured VLO stock as the Sept. 9 Trade of the Day, noting it was one of the few energy stocks that had not broken down through its long-term uptrend line. I recommended traders buy shares under $58 for a trade to $67.10, the top of the Aug. 21 gap down.
VLO stock trigged a buy on Sept. 28, hitting a low of $57.64, and then ran to a high above $68 on Monday. Traders who followed my advice made a gain of more than 17% in five weeks and may wish to take profits now.
However, this investment-grade stock is still appropriate for long-term buyers who could benefit from the company’s strong fundamentals.
On Oct. 28, the refiner reported better-than-expected earnings of $2.79 per share. Revenue of $22.6 billion also beat estimates, and management approved a 25% quarterly dividend increase. The company now pays 50 cents per share for a forward annual yield of 2.9%.
Following the earnings announcement, S&P Capital IQ Equity Research raised its 2015 EPS estimate by 41 cents to $8.65 and its 2016 forecast by 34 cents to $7.17.
Since breaking out in 2012 at about $25, VLO stock has been ramping up on a series of step ups. Support now rests slightly below its 200-day moving average, which is near $61.
A breakout occurred last week when VLO stock broke from its resistance line at under $66. As noted, traders may want to nail down a profit, but longer-term investors should either hold or add to their positions. This refiner is likely to break above its recent high at $71.50 and move on to Capital IQ’s target of $75.
