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Why Retain Strategy is Apt for Phillips 66 (PSX) Stock Now
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Phillips 66 (PSX - Free Report) has surged 65.1% in the past year compared with the industry’s 32.2% improvement.
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 its 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. Having 72,000 miles of U.S. pipeline network, the company expects nearly 80% of its midstream contracts to be fee-based, signifying a stable business model with low sensitivity to commodity price fluctuations.
Phillips 66, currently carrying a Zacks Rank #3 (Hold), has a strong focus on returning capital to shareholders. Since July 2022, the company has returned a massive $9.9 billion through both dividends and share repurchases. By the end of this year, it expects to meet its target of returning $13 billion to $15 billion to shareholders.
Risks
Phillips 66’s refining business is exposed to extreme volatility in commodity prices since the end products are made with raw crude oil. Rising input costs hurt the company’s refining business.
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.
Ultrapar Participacoes has a stable business model banking on its huge network of energy and infrastructure businesses in Brazil. Being a leading distributor of liquefied petroleum gas to residential, commercial and industrial consumers, Ultrapar may continue to generate stable cashflows.
Eni is leading the energy transition as well. The integrated energy player has been building a full set of decarbonized products and services for clients to achieve carbon neutrality by mid-century. Even though the energy business scenario is challenging, Eni’s efficient exploration keeps it highly competitive.
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Why Retain Strategy is Apt for Phillips 66 (PSX) Stock Now
Phillips 66 (PSX - Free Report) has surged 65.1% in the past year compared with the industry’s 32.2% improvement.
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 its 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. Having 72,000 miles of U.S. pipeline network, the company expects nearly 80% of its midstream contracts to be fee-based, signifying a stable business model with low sensitivity to commodity price fluctuations.
Phillips 66, currently carrying a Zacks Rank #3 (Hold), has a strong focus on returning capital to shareholders. Since July 2022, the company has returned a massive $9.9 billion through both dividends and share repurchases. By the end of this year, it expects to meet its target of returning $13 billion to $15 billion to shareholders.
Risks
Phillips 66’s refining business is exposed to extreme volatility in commodity prices since the end products are made with raw crude oil. Rising input costs hurt the company’s refining business.
Stocks to Consider
Some better-ranked energy companies are Sunoco LP (SUN - Free Report) , Ultrapar Participacoes SA (UGP - Free Report) and Eni SpA (E - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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.
Ultrapar Participacoes has a stable business model banking on its huge network of energy and infrastructure businesses in Brazil. Being a leading distributor of liquefied petroleum gas to residential, commercial and industrial consumers, Ultrapar may continue to generate stable cashflows.
Eni is leading the energy transition as well. The integrated energy player has been building a full set of decarbonized products and services for clients to achieve carbon neutrality by mid-century. Even though the energy business scenario is challenging, Eni’s efficient exploration keeps it highly competitive.