Thursday's IBD 50 Stocks To Watch pick is a leading energy stock that is grinding through a base while nearing a buy point. HF Sinclair holds a top spot in its industry group and just hit a new high on its relative strength line.
The Dallas-based refiner specializes in gasoline, diesel and jet fuels, renewable diesel and other specialty products. Its facilities are located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah.
Sinclair markets its products mainly in the Southwestern states, supplying fuels to 1,300 independent Sinclair-branded gas and mini-mart stores. The company also licenses fuel brands to more than 300 additional locations throughout the U.S.
The company has partnered with Holly Energy Partners, a Delaware-based limited partnership, to provide petroleum product and crude oil transportation, and storage to the petroleum industry.
Take Our Anonymous Survey And Tell Us What You Like (And Don't Like) About Your Online Broker
Ten Participants Will Win A $50 Amazon Gift Card
Energy Stock In Base Nearing a Buy Point
HF Sinclair stock is in a 15-week-long cup-with-handle base within 5% of the 56.40 buy point on the MarketSmith chart. Shares rose 7.2% Wednesday in heavy volume as crude prices rose following a drawdown in inventories. The stock pulled back Thursday in light volume amid the big sell-off.
The relative strength line is at a new high, as indicated by the blue dot on the chart. Shares are about 10% off their 52-week high.
Top Performer In A Leading Group
According to the CAN SLIM investing strategy, we strive to find leading stocks in the top five of the 40 strongest industries, with the upper 20 offering the most potent opportunities.
Sinclair holds the No. 1 spot in the Oil & Gas Refining/Manufacturing group, which is ranked No. 8 out of the 197 group IBD tracks. The group has a high 96 Relative Strength Rating.
The company reported a Q2 2022 profit of $5.59 per share on Sept. 22, up from $1 in Q1 and an 11-cent loss in Q4 2021. Analysts' consensus now stands at $12.99 per share for 2022, up from $1.54 in 2021.
Annual earnings are forecast to drop to $7.99 per share in 2023, as a result of lower oil prices
Quarterly sales have grown from 94% to 144% in the prior three quarters. DINO stock has a modest 9% sales growth rate in the last three years, as compiled by the IBD Stock Checkup.
Sinclair boasts a 99 Composite Rating and a near-perfect 98 Relative Strength Rating. The 80 EPS Rating is weighed down by limp results in prior years, including an 86-cent loss in 2020.
Institutions Back This Energy Stock
Mutual funds hold 40% of shares, with 702 funds owning the stock in June, up from 669 in March and 674 in December. Increasing fund ownership is considered a bullish sign as it shows traditional smart-money buying.
Finally, Piper Sandler raised its price target to 71 after the earnings release, maintaining its overweight rating. The stock pays a robust 2.9% annual dividend yield.
