Two Overlooked Refiners

The refining sector has followed up its stellar performance in 2012 with an extremely strong start in 2013. Sector heavyweights Valero (VLO) and Phillips 66 (PSX), which I have recommended several times over the last nine months, are both up better than 15% in the past month. The sector is experiencing positive tailwinds via growing domestic and Canadian oil production (which is lowering feedstock costs). Because no major refinery has been built in the U.S. since the 1970s, these companies have higher than average historical crack spreads (the profit refiners make by turning crude into petroleum products) and wide margins, which enrich to the bottom line.

I am hesitant to add to my positions in the major refiners given their recent huge run. But I am looking at smaller refiners that look like good buys on any kind of market pullback over the next few weeks....409 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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