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Why Hold Strategy is Apt for Phillips 66 (PSX) Stock Now
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Phillips 66 (PSX - Free Report) has gained 16.3% in the past year, outpacing the 4.3% rally of the composite stocks belonging to the industry.
What's Favoring the Stock?
PSX has a diversified business model, with a significant presence in businesses related to refining midstream, chemicals and marketing & specialties. In each of the operations, Phillips 66 has a solid footprint pertaining to safety, profitability, size and competitive strengths.
It is focusing more on businesses like midstream, renewables and chemicals, which makes the business model more stable. The firm’s premier midstream operations comprise the U.S. pipeline network, spread across 22,000 miles. The midstream portfolio includes multiple refined product terminals, crude oil terminals and NGL terminals. Thus, with a robust midstream business portfolio, Phillips 66 will generate stable cashflows with lower exposure to energy business volatility.
The firm’s financial strength is reflected in its lower debt exposure compared with the composite stocks belonging to the industry. PSX, carrying a Zacks Rank #3 (Hold), also has a disciplined capital allocation strategy.
Risks
Phillips 66’s refining business is exposed to extreme volatility in commodity prices since the end products are produced by raw crude oil. Moreover, the possibility of a slight economic slowdown might affect demand for the end products like gasoline and aviation fuels.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Global Partners is a leading operator of gasoline stations and convenience stores, having roughly 1,700 locations majorly in the Northeast. Over the past 60 days, Global Partners has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The royalty interest production figures of PHX MINERALS, for the last four reported figures, depict significant improvement. With new wells coming online in the prolific Haynesville Shale and Bakken plays, PHX MINERALS is witnessing a production increase in royalty volumes.
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Why Hold Strategy is Apt for Phillips 66 (PSX) Stock Now
Phillips 66 (PSX - Free Report) has gained 16.3% in the past year, outpacing the 4.3% rally of the composite stocks belonging to the industry.
What's Favoring the Stock?
PSX has a diversified business model, with a significant presence in businesses related to refining midstream, chemicals and marketing & specialties. In each of the operations, Phillips 66 has a solid footprint pertaining to safety, profitability, size and competitive strengths.
It is focusing more on businesses like midstream, renewables and chemicals, which makes the business model more stable. The firm’s premier midstream operations comprise the U.S. pipeline network, spread across 22,000 miles. The midstream portfolio includes multiple refined product terminals, crude oil terminals and NGL terminals. Thus, with a robust midstream business portfolio, Phillips 66 will generate stable cashflows with lower exposure to energy business volatility.
The firm’s financial strength is reflected in its lower debt exposure compared with the composite stocks belonging to the industry. PSX, carrying a Zacks Rank #3 (Hold), also has a disciplined capital allocation strategy.
Risks
Phillips 66’s refining business is exposed to extreme volatility in commodity prices since the end products are produced by raw crude oil. Moreover, the possibility of a slight economic slowdown might affect demand for the end products like gasoline and aviation fuels.
Stocks to Consider
Better-ranked players in the energy space include Evolution Petroleum Corporation (EPM - Free Report) , Global PartnersLP (GLP - Free Report) and PHX MINERALS INC. (PHX - Free Report) . While Evolution Petroleum and Global Partners sport a Zacks Rank #1 (Strong Buy), PHX MINERALS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Global Partners is a leading operator of gasoline stations and convenience stores, having roughly 1,700 locations majorly in the Northeast. Over the past 60 days, Global Partners has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The royalty interest production figures of PHX MINERALS, for the last four reported figures, depict significant improvement. With new wells coming online in the prolific Haynesville Shale and Bakken plays, PHX MINERALS is witnessing a production increase in royalty volumes.