Best Pick to Take Advantage of Rising Oil Prices

Ned Piplovic

Oil

After a steady decline in the first half of 2017, crude oil prices rose more than 40% since the beginning of July 2017.

Strong demand and reduced oil inventories drove the prices higher. Companies planning expansion investments and a potential economic expansion spurred by the tax cut bill passed in December 2017 should support rising demand for oil in 2018.

Oil

 

In the wake of these rising oil prices, Zacks Equity Research evaluated two major oil companies – Phillips 66 (NYSE:PSX) and Valero (NYSE:VLO) – to suggest which one seems like a better investment choice going into 2018.

Share prices of both companies held steady through the price drop during the first half of 2017 and took advantage of the rising oil prices in the second half to appreciate by double-digit percentages. Valero has the advantage in this category with 39% share price growth versus the 24% rise for Philips 66 in 2017.

Oil

Both companies provided comparable results in terms of dividend distributions. PSX paid a total annual dividend of $2.80 for 2017 which is equivalent to a 2.74% yield, using the January 10, 2018, share price. VLO distributed a total annual dividend of $2.60 in 2017. However, because of a lower January 2018 share price, VLO’s yield is 2.97%. While both companies provided higher returns than the 2.6% average yield for the entire sector, Valero scored another point in this category, albeit by a smaller margin than the share-price growth.

VLO provided a 45.7% combined total return to its shareholders over the past 12 months and PSX’s total return over the same period was 25.1%. Valero scored better in most other comparison categories – liquidity, return on capital and price-to-earnings (P/E) ratio – and is Zacks Equity Research’s recommendation by a small margin.

Exclusive  Execution is King in Choppy Markets

Some investors might prefer to invest in sectors with higher potential returns, such as technology or financials. However, Valero and other companies in the oil sector could be useful alternatives for investors looking for portfolio diversification.

 

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
previous article

Doom-and-gloom experts continue to maintain the economy is in a case of stagnation, but many signs are pointing to the fact that this is not true.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE