Valero Energy Corporation (VLO Quick QuoteVLO - Free Report) has gained 7.6% in the past six months compared with a rise of 5.3% of the composite stocks belonging to the industry.

What’s Favoring the Stock?

Valero, currently carrying a Zacks Rank #3 (Hold), is a best-in-class oil refiner involved in producing fuels and products that can meet the demands of modern life. Its refineries are located across the United States, Canada and the U.K. A total of 15 petroleum refineries, wherein Valero has ownership interests, have a combined throughput capacity of 3.2 million barrels per day.

The Renewable Diesel business segment of the firm comprises Diamond Green Diesel (“DGD”) — a joint venture between Darling Ingredients Inc. and Valero. DGD is a leading renewable fuel producer in North America. Low-carbon fuel policies across the globe primarily are aiding the demand for renewable diesel, therefore driving Valero’s Renewable Diesel business unit.

Valero boasts that its premium refining operations are resilient, even when the business operating environment is carbon-constrained. Its refining business has the capabilities to generate handsome cashflows that will allow it to return capital to shareholders and back growth projects.

Risks

However, being a premium refiner, the firm’s input costs are highly fluctuating, given the volatile pricing scenario of crude oil.

Stocks to Consider

Better-ranked energy companies include Sunoco LP (SUN Quick QuoteSUN - Free Report) , Energy Transfer LP (ET Quick QuoteET - Free Report) and Murphy USA Inc. (MUSA Quick QuoteMUSA - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Sunoco, the leading independent fuel distributor in the United States, has a stable business model and relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts. 

With more than 125,000 miles of pipeline and associated energy assets, Energy Transfer will generate stable fee-based revenues. The partnership’s pipeline network spans across all the key oil and natural gas resources across the United States.

Murphy USA is a renowned retailer of gasoline and convenience goods, distinguished by its adaptable business model that effectively enhances profitability during periods of economic expansion and recession.