U.S. equities are rallying back from steep initial losses on Tuesday as the initial shock of an overnight ballistic missile launch from North Korea fades. This has given way to a renewed focus on the aftermath of Hurricane Harvey in the Houston area. In Wall Street’s case, the attention has shifted back toward energy stocks.
Initial estimates suggest the impact from the storm on the overall U.S. economy should be limited. But a bigger impact is being felt in the energy sector, with refinery shutdowns worsening the crude oil oversupply situation. Goldman Sachs estimates that more than 16.5% of U.S. refining capacity has been shut down.
That’s a positive for refiners, though, as the “crack” spread between crude oil and gasoline prices widens.
As a result, a number of energy stocks are on the move higher. Here are three to monitor closely:
Energy Stocks to Watch: Valero Energy (VLO)
Valero Energy Corporation (NYSE:VLO) shares have lifted up and off of their 200-day moving average to challenge highs from the beginning of August — moving back to the upper end of a three-year trading range, bounded by the $70-a-share level on the topside.
Shares have been tightly rangebound since December, so investors are eager for a breakout here. It’s about $1 off its 52-week high of $68.95, and after that, there’s the $73 level from Valero’s 2015 breakout.
Valero’s success has also been fundamentally driven. When the company last reported earnings on July 27, profits of $1.23 per share beat estimates, and came on a 13.6% rise on revenues. Analysts are looking for earnings of $1.41 per share on revenues of $19.9 billion when it reports Q3 earnings in late October.
Energy Stocks to Watch: PBF Energy (PBF)
PBF Energy Inc (NYSE:PBF) is a provider of unbranded fuels, oils, and lubricants with facilities in Louisiana, Ohio, New Jersey, and elsewhere. The company recently acquired refineries in California and Louisiana from Exxon Mobil Corporation (NYSE:XOM).
PBF shares have rallied more than 10% over the past week alone, crossing back over its 200-day moving average to return to the upper end of its yearlong consolidation range. Shares have been rebuffed a couple times between $23 and $23.50; a break above that could be a significantly bullish trigger.
PBF Energy suffered an earnings miss Aug. 3 when a 6-cent loss missed estimates by 12 cents. Wall Street will be looking for a 69-cent profit on $4.9 billion in revenues when the company next reports earnings in early November.
Energy Stocks to Watch: Delek US Holdings (DK)
Delek US Holdings, Inc. (NYSE:DK) is an independent refinery company that operates two facilities — one in Tyler, Texas and the other in El Dorado, Arkansas. The company’s proximity to the Gulf Coast energy markets — PADD 3, as it’s known — gives it exposure to the most acute post-storm gasoline demand spike.
DK shares have surged more than 20% over the past week to retake both their 200-day and 50-day moving averages, returning to the center of a churning trading range that has been in play since December.
The company will next report results on Oct. 31 after the close. Analysts are looking for earnings of 30 cents per share on revenues of $2.2 billion — a steep improvement from its Aug. 2 report, when it lost 40 cents per share (to miss estimates by 37 cents) despite a 7.3% rise in revenues to $1.23 billion.