Valero Energy Corp (VLO)

The bad news is that the stock had moved back up to technical resistance in the $58-$59 area, before setting back down to another support level. Technically it has been walking upstairs steadily. The good news is that his Fair Market Value is well up over $100. He could see this getting as high as $80 on its current fundamentals.

Refiners are the ultimate cyclicals because you have no control over input costs and very little control over the end demand. There is still excess refining capacity, particularly in Europe. If you own, take profits because at some stage something will come along to upset the apple cart. Very thin margins on very large volume businesses.

Their refinery space is interesting. It has done extremely well. His favourite would probably be Marathon (MRO-N) which is all built on crack spreads, basically the differential between input costs (oil) and output (refined products). Right now, crack spreads are pretty wide, which has helped the refiners.

(Market Call Minute.) You don’t want to be anywhere near refineries at this time.

(Market Call Minute.) Thinks you are getting a squeeze on the refiners in the US. They’re getting under a little pressure.

On anything to do with energy, the season tends to end in early October. In energy, you have had the majority of the move. This one has had an okay move recently. Doesn’t know if he would be interested in owning the stock after the next few weeks.

If you are based in the mid west US or most of Canada you are buying oil at West Texas prices. Refineries in mid US and most of Canada have been very profitable. VLO is a mixture of both east coast and mid west US. You've probably seen the best in prices here.