One thing that lower gasoline prices over the past year have done is get American drivers back on the road in a big way, and they were out in full force over the recent Fourth of July holiday weekend. A new research report from Cowen notes that the most recent U.S. Energy Information Administration (EIA) weekly petroleum status report indicated that the recent four-week average gasoline demand of over 9.5 million barrels-per-day, was up over 6% year over year. Year to date, cumulative average demand was reported at over 9 million barrels per day, up 3.6% over the past year.
The kind of gasoline demand is driving solid numbers for the top refiners, which have been hit somewhat this year, after shining over the past couple of years, and some have fallen out of favor, not unlike the utility stocks. The Cowen team keep six refiners rated Outperform, and three of the companies are the analysts’ top picks to buy now.
This company is down from highs printed in April but is bouncing back nicely. PBF Energy Inc. (NYSE: PBF) engages in the refining and supply of petroleum products. It provides gasoline, ultra-low-sulfur diesel, heating oil, jet fuel, lubricants, petrochemicals and asphalt, as well as unbranded transportation fuels, heating oil, petrochemical feedstocks and other petroleum products. It has stated in the past that the rising RIN costs will be passed along to the consumer, which make for bad publicity, but will increase earnings.
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The stock surged last month when the company announced plans to acquire the Chalmette Refinery outside of New Orleans, a joint venture between Exxon Mobil and Venezuela’s PDVSA, for $322 million. With the addition of Chalmette to its portfolio, PBF will be able to boost its capacity by an additional 189,000 barrels per day from its current capacity of 725,000 barrels per day. It is expected that this deal will be able to boost the company’s earnings by as much as 20%.
PBF investors are paid an outstanding 4.04% dividend. The Cowen price objective for the stock is $35. The Thomson/First Call consensus price target is higher at $36.60. The stock closed most recently at $29.68.
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