Energy Business

Cowen Remains Bullish on Five Top Oil Refiners for the Rest of the Year

Tesoro Corp. (NYSE: TSO) is another one of the Cowen top picks in refining for this year. Many Wall Street analysts cite the possibility for meaningful EBITDA growth driven by its newly acquired Carson refinery and eventually through its Port of Vancouver crude logistics project. Investors are paid a 1.6% dividend. The Cowen price objective for the stock is $65, while the consensus is posted even higher at $67. Tesoro closed Friday at $59.60.

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Valero Energy Corp. (NYSE: VLO) has 56% of companywide refining capacity located in the U.S. Gulf Coast, which makes Valero well positioned to benefit from the ongoing infrastructure debottlenecking of inland crude oil supply in 2014 and beyond. Some Wall Street estimates have the company generating an astounding free cash flow compounded annual growth rate of 24% during the period from now to 2016. Investors are paid a 1.7% dividend. The Cowen price target is $61 and the consensus target is $62.49. Valero closed Friday at $51.67.

Western Refining Inc. (NYSE: WNR) has received big earnings revision boosts from Wall Street over the past few months with estimates for 2014 and 2015 increased by 8%. The refining segment operates refineries in El Paso, Texas, and Gallup, N.M. The Wholesale segment includes a fleet of crude oil and finished product truck transports, and has wholesale petroleum products operations in nine U.S. states. Investors are paid a respectable 2.5% dividend. The Cowen price target is $46 and the consensus is at $47.29. The stock closed Friday at $38.38.

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Despite a ton of negative sentiment, the refiners and energy as a whole look poised to do well the rest of the year. The condensate export issue took a toll on the stocks, and investors can buy some of these top names as much as 15% cheaper than two short weeks ago.

With oil prices over the $100 mark and the busy summer travel season already starting, demand should only start to increase from here. If the refinery investors get the spread blow-out that Cowen and other Wall Street firms are looking for in the fourth quarter, things could really get exciting for these top names to buy.

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