Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Oil & Gas - Refining and Marketing industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Oil & Gas - Refining and Marketing Stock News

Before choosing which top Oil & Gas - Refining and Marketing stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The fundamental outlook for the Oil & Gas Refining & Marketing (R&M) sub-industry for the next 12 months is positive. Following the significant economic events of the pandemic, demand has risen quickly over the past year. For a large part of 2022, supply has struggled to keep up with demand. As a result, margins hit record lows. Refining is a margin-focused industry where profits are made from the cost to acquire crude oil minus the cost of refined products. President Biden’s authorization to release barrels of crude oil from the Strategic Petroleum Reserve could have a downward impact on retail gasoline prices. The refining sub-industry is fairly concentrated, with just a handful of large firms owning the lion’s share of U.S. refining capacity, and more so today than during the last demand-fueled surge in crude oil prices (2007-2008). The industry as a whole faces threats from government as they focus on ESG initiatives. As of June 2022, the U.S. EIA projects that for 2022, gasoline prices will average $4.07 per gallon, above the $3.02 per gallon mark in 2021. For 2023, the EIA forecasts gasoline prices at $3.66/gallon. Year to date through June 30, this subindustry rose 26.8% versus a 20.5% drop for the S&P 1500. In 2021, the Refining & Marketing sub-industry rose 26.6%, while the S&P 1500 rose 26.7%.

Why Focus on Undervalued Oil & Gas - Refining and Marketing Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Oil & Gas - Refining and Marketing Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Oil & Gas - Refining and Marketing industry for Tuesday, January 30, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil & Gas - Refining and Marketing industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

BP plc (ADR)’s Value Grade

Value Grade:

BP p.l.c. provides energy products and services to its customers. The Company's segments include gas & low carbon energy, oil production & operations and customers & products. The gas & low carbon energy segment comprises its gas & low carbon businesses. Its gas business includes regions with upstream activities that predominantly produce natural gas, integrated gas and power, and gas trading. Its low carbon business includes solar, offshore and onshore wind, hydrogen and CCS, power trading, and its share in bp Bunge Bioenergia. Its oil production & operations segment comprises regions with upstream activities that predominantly produce crude oil, including bpx energy. The customers & products segment comprises its customer-focused businesses, which include convenience and retail fuels, electric vehicle charging, as well as Castrol, aviation and business-to-business and midstream. It also includes its products businesses, refining & oil trading, as well as its bioenergy businesses.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

BP plc (ADR) has a Value Score of 98, which is considered to be undervalued.

When you look at BP plc (ADR)’s price-to-sales ratio at 0.45 compared to the industry median at 0.29, this company has a higher price relative to revenue compared to its peers. This could make BP plc (ADR)’s stock less attractive for value investors.

BP plc (ADR)’s price-earnings ratio is 3.93 compared to the industry median at 10.51. This means it has a lower share price relative to earnings compared to its peers. This could make BP plc (ADR) more attractive for value investors.

Now, let’s assess BP plc (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 2.5, when compared to the industry median of 5.7, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. BP plc (ADR)’s shareholder yield is higher than its industry median ratio of 5.94%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. BP plc (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.86. This could make BP plc (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BP plc (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BP plc (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 12.91. This could make BP plc (ADR) more attractive because the lower P/FCF ratio indicates that BP plc (ADR) is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Imperial Oil Ltd’s Value Grade

Value Grade:

Imperial Oil Limited is a Canada-based integrated oil company. The Company is engaged in all phases of the petroleum industry in Canada, including the exploration for, and production and sale of, crude oil and natural gas. It is also a producer of crude oil, a petroleum refiner and a marketer of petroleum products. It is also a producer of petrochemicals. The Company’s operations are conducted in three main segments: Upstream, Downstream and Chemical. The Company’s operations include Cold Lake, Kearl, Nanticoke, Sarnia and Strathcona refinery. The Company’s products and services include Asphalt, Chemical products, Esso and Mobil stations, Esso Commercial Cardlocks, Lubricants, Marine, Safety Data Sheets and Wholesale fuels. The Sarnia operation is an integrated fuel, chemical manufacturing and petroleum research facility in Canada. The refinery can process about 120,000 barrels of crude oil daily. This crude oil is processed into a range of products for heat and transportation.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Imperial Oil Ltd has a Value Score of 81, which is considered to be undervalued.

Imperial Oil Ltd’s price-to-book ratio is higher than its peers. This could make Imperial Oil Ltd less attractive for value investors when compared to the industry median at 1.86.

You can read more about Imperial Oil Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Vertex Energy Inc’s Value Grade

Value Grade:

Vertex Energy, Inc. is an energy transition company specializing in refining and marketing high-value conventional and lower-carbon alternative transportation fuels. The Company operates through two segments: Refining and Marketing, and Black Oil and Recovery. The Refining and Marketing segment manages the refining of crude oil and distributes finished products across the southeastern United States through a high-capacity truck rack, together with deep and shallow water distribution points capable of supplying waterborne vessels. The Black Oil and Recovery segment aggregates and manages the re-refinement of used motor oil and other petroleum by-products and sells the re-refined products to end customers. It manages the logistics of transport, storage and delivery of used oil to its customers. It owns a fleet of about 25 transportation trucks. The Company operates used motor oil processing plants in Houston, Texas, Port Arthur, Texas, Marrero, Louisiana, and Columbus, Ohio.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Vertex Energy Inc has a Value Score of 83, which is considered to be undervalued.

Vertex Energy Inc’s price-to-book ratio is higher than its peers. This could make Vertex Energy Inc less attractive for value investors when compared to the industry median at 1.86.

You can read more about Vertex Energy Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Oil & Gas - Refining and Marketing Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Oil & Gas - Refining and Marketing stocks as well as other industrys.

Choosing Which of the 3 Best Oil & Gas - Refining and Marketing Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• BP plc (ADR) stock has a Value Grade of A.
• Imperial Oil Ltd stock has a Value Grade of A.
• Vertex Energy Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Oil & Gas - Refining and Marketing industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Oil & Gas - Refining and Marketing Stocks

Want to learn more about Oil & Gas - Refining and Marketing stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Oil & Gas - Refining and Marketing Stocks for Tuesday, January 30
• 5 Undervalued Oil & Gas - Refining and Marketing Stocks for Monday, January 29
• 3 Undervalued Oil & Gas - Refining and Marketing Stocks for Friday, January 26
• Why CVR Energy, Inc.’s (CVI) Stock Is Up 4.28%

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