HOW TO BUY VALERO STOCK (Valero VLO)  You will want to know how to buy Valero stock if you are looking to truly improve your portfolio.  This is a question I am asked quite frequently and one I ask myself just as often.  The answer is usually the opposite of what the talking heads on TV would recommend.  I am of the theory of going with a stock when everyone else is running away.  Today, I am looking at adding a new position to the long term hold portfolio and the stock may just surprise you.  At this point in March, the S&P 500 is at an all time high for this year and the economy is humming along like a freight train.  I would be worried that we don’t have the gas to keep up the growth, but with Europe and Asia doing a new round of QE, I think we will continue to see the market climb up to ever new levels. ( I wrote my estimate here for how high I think it will go)  Now with that being said, what stock should I buy right now to maximize my return on investment?
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As I stated up above, I am looking for a sector that is being crushed and offers me a great opportunity to buy a company at a level that is considered a bargain.  When you are thinking of a sector that is being beat down, I think the first one that pops into my head is the oil industry.  The price of oil has dropped by a very substantial amount over the last year.  I am not saying that it is done falling, but I am saying that the price of oil will rebound and reclaim some of those lost percentages.  Will it hit a new high this year or next?  Probably not, but I wouldn’t be surprised to see prices return by 2017-2019.  But with all that aside, the prices of some of these energy and oil stocks are at extremely attractive levels right now.  Now the question is, which one is the best one out of all the possibilities?  Knowing how to buy Valero stock will benefit you for years to come.

Before revealing my findings, I want you to think about this.  Many so called financial experts are predicting the market to gain around 6-8% per year for the next 3 years.  If they are right, then finding a solid oil stock that can earn 50% in 3 years plus dividends would easily beat investing in an ETF of the market, wouldn’t it?  I believe that the experts might be off a little bit, but the idea of these oil stocks making a strong comeback is not.  They are starting to recover already and that is a good sign going forward.  The idea is not to catch a falling knife, but to grab the tail of the rocket as it is already taking off.  This is how to buy Valero stock.

Now there are quite a few stocks that I talked about when it comes to the oil industry, which you can read about here.  All of those oil plays would be solid ones, that is something I truly believe.  But, I don’t think they are the ones that will give me the best chance to double my money over the next 3-5 years.  Of course they are all trading at a price to earnings ratio under 15, which is a must when it comes to value investing.  But they just are not the best bang for my investment buck.  When it comes to figuring out the answer to what stock should I buy right now, it seems to be a no-brainer.  It comes in the form of a large cap company name Valero Energy.

Valero Energy (VLO $59.75) has been beaten just like the rest of the energy companies out there, but they are looking a little more ripe in terms of attaining an above average stock appreciation.  They are currently trading with a price to earnings ratio of 8.24 based on 2016 expected earnings, when most of the other big name companies in this sector are trading at around 12. Valero Energy is now starting a nice uptrend when it comes to its stock price, which tells me that the big institutional investors are taking notice to the possibilities of this company as well.  It is paying out a fair dividend of 3.69%, which gives us a little extra protection on the downside for the short term.  And if this company’s stock price keeps going higher, which I expect it to do, then this dividend will be icing on the cake.  You can see from the chart below that Valero is starting to be recognized all over the country and are steadily growing.  This to me is like a giant Christmas present waiting to be opened. :)

I want to take a more in-depth look at Valero’s expected earnings over the next 2 years in order to fully explain why I am going to add more shares of this stock to my portfolio on Monday.   I want to jump right out to 2016, when Valero is expected to earn about $7.59 a share.  If this is correct, then the forward price to earnings ratio for this stock is a little over 8.  This means that if this company wants to trade at a price to earnings of 15, which it should easily be doing, then the stock price should be roughly $114.30 a share.  That is easily more than double what the stock is trading at now.  I am not sure if the stock will double in the next 2 years, but I am confident that it should be able to outperform the market in general terms of gains year after year.  Learning how to buy Valero stock will put you in the driver’s seat when it comes to improving your portfolio.

Now there are other reasons I like this company besides just their earnings going forward.  If you take a look at the last 5 quarterly announcements, you will see that they have easily outperformed what the analysts expected from them.   The fact that this company continues to grow and exceed expectations quarter after quarter is a great sign that management is doing the right moves internally.  They have a ton of cash on hand to cover most of their debt and have even been buying back shares of their own stock, which is always a positive sign.  Companies usually do that when they think they will be able to sell them later at a higher price or they have so much cash that they don’t know what to do with it.  Whatever the reason, Valero Energy is looking very solid at the moment.  How to buy Valero stock the right way?  I think we are starting to get a clearer picture on that answer.

But there has to be more for us to want to pluck our money down on yet another oil company…right?  Well there is more to it.  Valero is set to benefit majorly when it comes to the future of oil on this continent.  With the latest rounds of political shuffling done, you might have read about the Republicans taking over control of the Senate and adding more seats to the House of Representatives.  At this point, it doesn’t matter if you are a Republican or a Democrat, you are an investor and need to figure out how the change can be taken advantage of in terms of ROI.  The main benefit I am predicting for Valero is going to come from the advancement of the Keystone XL Pipeline.  Right now, Valero is paying a much higher price for its oil to overseas markets.  This can be dramatically lowered once they can start taking advantage of the Canadian oil.  They are predicting much better margins and thus much higher profits, once the pipeline is finally okayed by the United States government.   The ultimate question of how much more in earnings the company will make has yet to be announced, but I would already want to be holding this stock once the announcement comes out.  This is how to buy Valero stock before the news and cash in.

At this point, you have to look around the market and judge all the different sectors and see which ones offer you the greatest chance of beating the market.  I am not seeing a ton of great opportunities out there that offer great upside potential and limited downside potential like I am seeing with this stock.  There are always stocks out there that carry expensive price tags when it comes to price to earnings, but their downside potential is extremely high and this is something we should want to avoid in order to protect our investment dollars.  You are probably not going to hear a ton of news on this company going forward, but you should see a steady stock appreciation over the next 24 months as the government starts to push through the bills concerning the Keystone XL Pipeline.  But remember that this company has been crushing expected results for the last 5 quarters even without the pipeline.  This tells me that they are easily on track to being one of the most efficient oil companies out there and good enough to earn my trust with my investment dollars.  I will not be surprised at all to see this company double its stock price in the next 3-5 years…at the latest.  This is how to buy Valero stock the right way.


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Notice: Any information that is written on this site is for educational purposes only. It should never be considered as financial or investing advice. Anything you read on this site is just informational and that is it. I am no longer a registered financial advisor and licensed by the SEC. I am now just a blogger who enjoys writing about stocks and making money online. You should always seek a professional financial advisor for advice on investing and any stock you are considering. Remember that investing is inherently risky and you could lose all of your money. I am also an affiliate of some of the items discussed on this site. In other words, I may be paid for people buying stuff off of this site and the links on here as well. This is how I am able to keep the site up and running.