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Keep Portfolio Swings in Check With VLO, PBF, FET & E
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Key Takeaways
VLO benefits from diverse, low-cost crude sources that can help cut refining costs and boost profits.
PBF may gain as high refinery utilization and resilient U.S. demand help offset elevated input costs.
FET targets debt reduction and growth, while Eni expects oil and gas production to rise.
Uncertainty and fears continue to dominate the stock market as oil prices remain high due to Middle East tensions. With the market expected to remain highly volatile, it is advisable for investors to increase their allocation to low-beta stocks. Companies that seem to be good bets now are Valero Energy Corporation (VLO - Free Report) , PBF Energy (PBF - Free Report) , Forum Energy Technologies Inc (FET - Free Report) and Eni SpA (E - Free Report) .
What Does Beta of a Stock Measure?
Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.
If a stock has a beta of 1, then the price of the stock will move with the market. So, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.
For example, if the market offers a return of 20%, a stock with a beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.
Screening Criteria Using Research Wizard:
We have taken a beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters that can add value to the portfolio.
Percentage Change in Price in the Last 4 Weeks Greater Than Zero: This ensures that the stocks saw positive price movement over the last month.
Average 20-Day Volume Greater Than 50,000: A substantial trading volume ensures that the stocks are easily tradable.
Price Greater Than or Equal to $5: They must all be trading at a minimum of $5 or higher.
Zacks Rank Equal to 1 (Strong Buy): Zacks Rank #1 stocks indicate that they will significantly outperform the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four of the 14 stocks that qualified:
Valero Energy
Valero has an advantage from its access to crude feedstock because its Gulf Coast refineries can buy crude oil from many low-cost sources, including the United States, Canada and Venezuela. This gives the company more flexibility to purchase cheaper oil, which helps keep refining costs low and can boost profits when competitors have fewer sourcing options.
PBF Energy
PBF Energy is among the leading refiners in the United States. High refinery utilization amid resilient U.S. demand is expected to continue to offset the negative impacts of elevated input costs, driven by high oil prices. This should boost PBF’s bottom line.
Forum Energy Technologies
Forum Energy is well-positioned to capitalize on growing global energy demand, as it is a well-known provider of equipment and solutions to companies for finding and producing oil and natural gas. FET is strongly focused on debt reduction and strategic investments, while allocating a significant proportion of its free cash flow to strengthen its balance sheet and support long-term growth initiatives.
Eni
Eni expects its oil and gas production to grow about 4% annually through 2030, driven by new projects across Asia, Latin America and Africa. The company also has more projects lined up that can support growth beyond 2030.
View the Zacks #1 Rank List
Image: Shutterstock
Keep Portfolio Swings in Check With VLO, PBF, FET & E
Key Takeaways
Uncertainty and fears continue to dominate the stock market as oil prices remain high due to Middle East tensions. With the market expected to remain highly volatile, it is advisable for investors to increase their allocation to low-beta stocks. Companies that seem to be good bets now are Valero Energy Corporation (VLO - Free Report) , PBF Energy (PBF - Free Report) , Forum Energy Technologies Inc (FET - Free Report) and Eni SpA (E - Free Report) .
What Does Beta of a Stock Measure?
Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.
If a stock has a beta of 1, then the price of the stock will move with the market. So, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.
For example, if the market offers a return of 20%, a stock with a beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.
Screening Criteria Using Research Wizard:
We have taken a beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters that can add value to the portfolio.
Percentage Change in Price in the Last 4 Weeks Greater Than Zero: This ensures that the stocks saw positive price movement over the last month.
Average 20-Day Volume Greater Than 50,000: A substantial trading volume ensures that the stocks are easily tradable.
Price Greater Than or Equal to $5: They must all be trading at a minimum of $5 or higher.
Zacks Rank Equal to 1 (Strong Buy): Zacks Rank #1 stocks indicate that they will significantly outperform the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four of the 14 stocks that qualified:
Valero Energy
Valero has an advantage from its access to crude feedstock because its Gulf Coast refineries can buy crude oil from many low-cost sources, including the United States, Canada and Venezuela. This gives the company more flexibility to purchase cheaper oil, which helps keep refining costs low and can boost profits when competitors have fewer sourcing options.
PBF Energy
PBF Energy is among the leading refiners in the United States. High refinery utilization amid resilient U.S. demand is expected to continue to offset the negative impacts of elevated input costs, driven by high oil prices. This should boost PBF’s bottom line.
Forum Energy Technologies
Forum Energy is well-positioned to capitalize on growing global energy demand, as it is a well-known provider of equipment and solutions to companies for finding and producing oil and natural gas. FET is strongly focused on debt reduction and strategic investments, while allocating a significant proportion of its free cash flow to strengthen its balance sheet and support long-term growth initiatives.
Eni
Eni expects its oil and gas production to grow about 4% annually through 2030, driven by new projects across Asia, Latin America and Africa. The company also has more projects lined up that can support growth beyond 2030.