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Analyst Blog

On Oct 8, 2013, Zacks Investment Research upgraded fuel logistic operator World Fuel Services Corp. (INT - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The company delivered earnings surprises in the last three out of four quarters with an average beat of 12.95%. The long-term expected sales growth of World Fuel Services is poised at a promising 31.33%.

The booming Asia-Pacific aviation market, efficient operating capabilities and increasing use of rail transport systems by pipeline operators in the U.S. have made World Fuel Services a prime industry player.

The midstream companies are busy capitalizing on the shale explosion in the U.S. which will boost demand for transportation channels. This will likely benefit World Fuel Services’ land fuel supply business.

The company is also aggressively pursuing options to expand its bio-fuel business which is gaining popularity as a clean alternative option to jet fuel in the U.S.  World Fuel Services has strategic collaborations in Mexico and Brazil to create a strong bio-fuel chain.

In addition, World Fuel Services’ healthy cash position which increased 34.1% to $232 million at the end of the second quarter 2013 from $173 million at the end Dec 31, 2012 will effectively finance its future growth-centric projects.

However, the high volatility in gasoline and jet fuel prices will continue to affect World Fuel Services’ business.

Other Stocks to Consider

Other industry counterparts presently looking attractive are Zacks Ranked #2 (Buy) Carrizo Oil & Gas Inc. (CRZO - Snapshot Report), Cimarex Energy Co. (XEC - Snapshot Report) and Marathon Oil Corp. (MRO - Analyst Report).

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