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The world’s major oil exporters are set to meet tomorrow amid cries from across the globe to halt the ascent of oil prices. OPEC+, a group of 23 oil-exporting countries, meets monthly to discuss the amount of crude oil output. At the core of this group are 13 member nations of the Organization of Petroleum Exporting Countries (OPEC). Back in 2016, OPEC combined services with 10 non-OPEC oil producers to create OPEC+. Together, these countries produce approximately 40% of the crude oil across the globe.
Among the OPEC+ group is Russia, a country that produces over 10 million barrels of oil per day. Russia is one of the two largest partners in the alliance, and it seems Russians are content with oil prices at this level as they have little to gain in seeing them move lower. As OPEC wishes to keep good relations with Russia, the organization and their allies are expected to stick to their previously agreed-upon policy to only gradually increase monthly production. This may help keep oil prices high in the short-term.
Adding to the move, oil prices jumped on Wednesday as the European Union stated its intent to phase out imports of Russian oil, offsetting demand concerns given the COVID-related lockdowns in China. West Texas Intermediate crude futures rose 3.68% to $106.18/barrel.
Oil-related stocks tend to have a high correlation with the price of crude oil. Higher oil prices are good news for oil company margins and profits. As crude prices continue to move higher, the opportunity for investors to profit expands. There are a wide range of subindustries within the Zacks Oils and Energy sector that have been outperforming this year.
The Zacks Oil and Gas – Refining and Marketing industry group has advanced 44.55% this year and is making new highs today. This industry group is currently ranked in the top 22% out of approximately 250 industries. Because it is ranked in the top half of all industries, we expect it to outperform over the next three to six months.
Quantitative research studies suggest that approximately half of a stock’s future price appreciation is due to its industry grouping. By focusing on the top stocks within the best-performing industries, we can dramatically improve our odds of success. Also note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
Let’s take a deeper dive into a Zacks Rank #1 (Strong Buy) stock within this top industry.
PBF Energy is a leading refiner that produces gasoline, diesel, heating oil, jet fuel, and petrochemicals. The company sells its products in the United States, Canada, and Mexico. PBF also provides rail, truck, and marine transportation services. PBF Energy was founded in 2008 and is headquartered in Parsippany, NJ.
PBF has surpassed earnings estimates in each of the past three quarters. The refiner most recently reported Q1 EPS last week of $0.35, a 34.62% surprise over the $0.26 consensus estimate. PBF has delivered a trailing four-quarter average earnings surprise of 61.45%, aiding the stock’s 98.4% return over the past year.
PBF Energy Inc. Price, Consensus and EPS Surprise
Despite the impressive performance, PBF trades relatively undervalued at a forward P/E of 5.39 compared to its industry (13.36). Analysts have increased their full-year earnings estimates by 221.02% in the past 60 days. The 2022 Zacks Consensus EPS estimate now stands at $5.65, translating to potential growth of 326% relative to last year.
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Refiners Showing Relative Strength As Oil Spikes
The world’s major oil exporters are set to meet tomorrow amid cries from across the globe to halt the ascent of oil prices. OPEC+, a group of 23 oil-exporting countries, meets monthly to discuss the amount of crude oil output. At the core of this group are 13 member nations of the Organization of Petroleum Exporting Countries (OPEC). Back in 2016, OPEC combined services with 10 non-OPEC oil producers to create OPEC+. Together, these countries produce approximately 40% of the crude oil across the globe.
Among the OPEC+ group is Russia, a country that produces over 10 million barrels of oil per day. Russia is one of the two largest partners in the alliance, and it seems Russians are content with oil prices at this level as they have little to gain in seeing them move lower. As OPEC wishes to keep good relations with Russia, the organization and their allies are expected to stick to their previously agreed-upon policy to only gradually increase monthly production. This may help keep oil prices high in the short-term.
Adding to the move, oil prices jumped on Wednesday as the European Union stated its intent to phase out imports of Russian oil, offsetting demand concerns given the COVID-related lockdowns in China. West Texas Intermediate crude futures rose 3.68% to $106.18/barrel.
Oil-related stocks tend to have a high correlation with the price of crude oil. Higher oil prices are good news for oil company margins and profits. As crude prices continue to move higher, the opportunity for investors to profit expands. There are a wide range of subindustries within the Zacks Oils and Energy sector that have been outperforming this year.
The Zacks Oil and Gas – Refining and Marketing industry group has advanced 44.55% this year and is making new highs today. This industry group is currently ranked in the top 22% out of approximately 250 industries. Because it is ranked in the top half of all industries, we expect it to outperform over the next three to six months.
Quantitative research studies suggest that approximately half of a stock’s future price appreciation is due to its industry grouping. By focusing on the top stocks within the best-performing industries, we can dramatically improve our odds of success. Also note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
Let’s take a deeper dive into a Zacks Rank #1 (Strong Buy) stock within this top industry.
PBF Energy Inc. (PBF - Free Report)
PBF Energy is a leading refiner that produces gasoline, diesel, heating oil, jet fuel, and petrochemicals. The company sells its products in the United States, Canada, and Mexico. PBF also provides rail, truck, and marine transportation services. PBF Energy was founded in 2008 and is headquartered in Parsippany, NJ.
PBF has surpassed earnings estimates in each of the past three quarters. The refiner most recently reported Q1 EPS last week of $0.35, a 34.62% surprise over the $0.26 consensus estimate. PBF has delivered a trailing four-quarter average earnings surprise of 61.45%, aiding the stock’s 98.4% return over the past year.
PBF Energy Inc. Price, Consensus and EPS Surprise
Despite the impressive performance, PBF trades relatively undervalued at a forward P/E of 5.39 compared to its industry (13.36). Analysts have increased their full-year earnings estimates by 221.02% in the past 60 days. The 2022 Zacks Consensus EPS estimate now stands at $5.65, translating to potential growth of 326% relative to last year.