Buying Refiners on the Dip

On March 18, I posted in Columnist Conversation that I was lightening up on the refinery stocks. I had a great run over the previous 12 months, but thought it was prudent to sell half of my holdings. I did this as the sector had staged a huge run over the past year, the sentiment on the sector was overwhelming positive and I thought the new mandates on refiners had the potential to require significant new investment from the sector which would cut margins.

That call turned out to be prescient, as most of these stocks have lost 10% or more since then. The fall has been driven on concerns about new EPA mandates, which caused analysts to revise earnings estimates lower on some of the major refinery stocks like Tesoro (TSO) and Valero (VLO). In addition, crack spreads have weakened a bit recently as well....477 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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