Long: Tesoro Corp (TSO)
Buy at Current Price
Wednesday, September 30, 2015
|Company||Symbol||Industry||Current Price||Target Price||Potential Gain %||Stop||Potential Loss %|
|Tesoro Corp||TSO||Oil & Gas Refining & Marketing||$97.70||$105.00||+7.47%||$96.23||-1.50%|
Three Key Points:
1. Energy has been abysmal in 2015. One look at the SPDR Energy ETF (XLE) is enough to say, "thanks, but no thanks," and move on. Most of the sub-industries in Energy are also extremely weak: Exploration and Production (XOP), Equipment & Services (IEZ), Natural Gas (FCG), Oil (USO), you name it - all bad. However, there is one bright spot in the relegated sector that is heavily outperforming and has a few ripe trade candidates - Refiners.
2. Refiners haven't taken nearly as big of a hit as the rest of Energy, and it's easy to see when viewing the major constituents of the sub-industry. VLO, TSO, MPC, and PSX all have held up relatively well over the past 6 months. From a technical perspective, each of these stocks look decent in the short-term. However, looking at a weekly chart, TSO sticks out like a sore thumb. The long-term up-trend of this stock is absolutely sterling, especially relative to its competitors.
3. So, we've identified what is potentially the best-performing large-cap Energy stock on the market right now, so how do we trade it? TSO has two stopping points ahead of it to the upside - $105 and the August highs of just below $110. The stock has short-term support at $96.23, which makes for a nice stop with a short leash (just -1.5% potential loss). This should help limit the downside moving forward. Should the stock continue to trend higher, look for $105 to be a nice point to sell out and capture a quick +7.47% gain. The stock has not been acting with the market or the Energy sector recently, so it looks like a great bet to trade, especially if Oil continues to stabilize and starts to turn higher. It's not easy getting Energy exposure these days, but TSO is the best bet in this sector at the moment.
Tesoro Corporation is an independent petroleum refining and marketing company. Through its subsidiaries, the Company primarily transports crude oil and manufactures, transports and sells transportation fuels. The Company operates through three business segments: Refining operating segment, which owns and perates six petroleum refineries with a combined crude oil capacity of 850 thousand barrels per day (Mbpd) located in the western United States and sells transportation fuels to a variety of customers; TLLP, a publicly traded limited partnership, which includes certain crude oil and natural gas gathering assets, natural gas processing and crude oil and refined products terminalling, transportation and storage assets, and Retail operating segment, which sells transportation fuels in approximately 16 states through a network of approximately 2,267 retail stations under the ARCO, Shell, Exxon, Mobil, USA Gasoline and Tesoro brands.
At the time of publication the editor and affiliated companies own the following positions: None
Note: Positions may be bought or sold while this publication is in circulation without notice.
Key Points to Consider When Trading
1. When does the company report earnings? If it's within the week, perhaps it's best to not participate in the trade or get out before the report.
2. How much cash are you committing to this trade? How aggressive you want the trade to be is entirely up to you, but I like to stick around a 10% per position commitment. Not extremely aggressive, and keeps cash on hand to use elsewhere.
3. Look at the company in your own screening software. Do you see the same things I see? Are you convinced this is a good trade to make? Find other factors and do additional analysis on these ideas. I like to use moving averages, Donchian chains, varying time frames, and more to do additional analysis.
4. How correlated is this company to the general market? How about to other factors like interest rates, oil prices, gold, etc? Do you want this type of correlation in this trade? Sometimes the answer is yes, sometimes it's no. Pick and choose which ideas work for you.
5. Not every trade is a winner. Stick to your sell discipline when things break down.
6. When trades are winners, it's easy to not take profits in hopes that the stock continues the trend you've bet on. Stick to your sell discipline when you're in the green as well - it may be hard, but developing discipline and consistency is key.
The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of StateoftheMarkets.com and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided 'as is' without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
The information contained in our websites and StateoftheMarkets.com publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.
Index returns are price only and do not include the reinvestment of dividends. The S&P 500 is a stock market index containing the stocks of 500 large-cap corporations, most of which are US companies. The index is the most notable of the many indices owned and maintained by Standard & Poor's, a division of McGraw-Hill. S&P 500 is used in reference not only to the index but also to the 500 companies that have their common stock included in the index.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
© 2015 StateoftheMarkets.com - StateoftheMarkets.com does not provide investment advice. All rights reserved.