Wednesday's IBD 50 Stocks To Watch pick — energy giant Valero Energy — is one of the top stocks to buy and watch in the ongoing stock market uptrend. VLO stock trimmed gains to just 0.2% midday Wednesday, trading just 2% below the latest buy point.
San Antonio, Texas-based Valero refines and sells petroleum in the U.S., U.K., Canada, Ireland and Latin America. The energy giant's 13 refineries have a capacity of 3.2 million barrels per day. It also has a joint venture with Diamond Green Diesel Holdings in Louisiana, and owns 12 ethanol plants in the midcontinental zone.
Oil prices rose again Wednesday, lifting West Texas Intermediate futures to $82 per barrel. China's Covid reopening will lead to record oil demand, according to the International Energy Agency.
The futures contract added 2% to its highest level since early December. WTI moved further above its 50-day moving average line, after mounting that level for the first time since November on Tuesday.
In the third quarter's late-October release, Valero reported that earnings and sales jumped 485% and 43%, respectively, vs. the year-ago period.
Fourth-quarter earnings are due out Jan. 26 before the market opens. Analysts are looking for a 194% year-over-year earnings surge to $7.26 per share, on a 13% rise in sales to $40.51 billion.
Valero's IBD Stock Ratings
This energy stock to buy and watch shows a solid 82 out of 99 Earnings Per Share Rating and an SMR Rating of C, according to IBD Stock Checkup.
Over the last two quarters, Valero's EPS growth averaged 891%, according to IBD MarketSmith. Earnings are expected to soar 894% in 2022 before falling 31% in 2023. The company posted a modest 2% pretax margin in 2021 and a 6% return on equity.
Boasting a lofty 98 IBD Composite Rating, backed by strong fundamental and technical metrics, Valero is one of the top-ranked stocks in the Oil & Gas-Refining/Marketing industry group. Another group member is Phillips 66, which is building a flat base with a 113.63 buy point.
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Stocks To Buy And Watch: VLO Stock Eyes Latest Buy Point
Valero shares are building a big cup-with-handle base with a 142.26 buy point, according to IBD MarketSmith chart analysis. Shares are about 2% away from the latest buy point amid a potential nine-day win streak, as the stock moved up 0.2% midday Tuesday.
In recent weeks, the stock decisively reclaimed its key 50-day line. Meanwhile, the relative strength line is just shy of new highs, which is a positive sign in the early stages of a market uptrend. The RS line measures a stock's price performance vs. the S&P 500.
Given the energy leader's fundamental and technical strength, Valero is one of the top stocks to buy and watch in the current market.
Other IBD 50 Stocks To Buy And Watch
These are three recent IBD 50 Stocks To Watch picks.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Lincoln Electric | 150.78 | Flat base | |
| Lennar | 95.34 | Cup with handle | |
| Afya | 17.12 | Consolidation |
Source: IBD Data As Of Jan. 18, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
