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.

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, June 04, 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.

Delek US Holdings Inc’s Value Grade

Value Grade:

Delek US Holdings, Inc. is a diversified downstream energy company with assets in petroleum refining, logistics, pipelines, renewable fuels and convenience store retailing. The Company's segments include Refining, Logistics and Retail. The Refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products. The Refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi. The Logistics segment is engaged in gathering, transporting, offloading and storing crude oil and natural gas; for storing intermediate products and feedstocks, and disposing and recycling water. The Retail segment includes the operations of owned and leased convenience store sites located in West Texas and New Mexico.

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.

Delek US Holdings Inc has a Value Score of 95, which is considered to be undervalued.

When you look at Delek US Holdings Inc’s price-to-sales ratio at 0.10 compared to the industry median at 0.31, this company has a lower price relative to revenue compared to its peers. This could make Delek US Holdings Inc’s stock more attractive for value investors.

Now, let’s assess Delek US Holdings Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 7.0, when compared to the industry median of 6.6, the company may be considered overvalued 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. Delek US Holdings Inc’s shareholder yield is higher than its industry median ratio of 6.00%. 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. Delek US Holdings Inc’s price-to-book ratio is higher than its industry median ratio of 1.88. This could make Delek US Holdings Inc fairly attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Delek US Holdings Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Delek US Holdings Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 11.49. This could make Delek US Holdings Inc more attractive because the lower P/FCF ratio indicates that Delek US Holdings Inc 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.

Phillips 66’s Value Grade

Value Grade:

Phillips 66 is a diversified and integrated downstream energy provider with midstream, chemicals, refining, and marketing and specialties businesses. The Company’s segments include Midstream, Chemicals, Refining, and Marketing and Specialties (M&S;). Its Midstream segment provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and natural gas liquids (NGL) transportation, storage, fractionation, gathering, processing and marketing services, mainly in the United States. The Chemicals segment consists of its equity investment in Chevron Phillips Chemical Company LLC, which manufactures and markets petrochemicals and plastics on a worldwide basis. Its Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels. Its Marketing & Specialties segment purchases for resale and markets refined petroleum products and renewable fuels.

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.

Phillips 66 has a Value Score of 65, which is considered to be undervalued.

Phillips 66’s price-earnings ratio is 10.7 compared to the industry median at 10.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Phillips 66 fairly attractive for value investors.

Phillips 66’s price-to-book ratio is lower than its peers. This could make Phillips 66 more attractive for value investors when compared to the industry median at 1.88.

You can read more about Phillips 66’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.

World Kinect Corporation’s Value Grade

Value Grade:

World Kinect Corporation is a global energy management company. The Company is engaged in offering fulfillment and related services across the aviation, marine, and land-based transportation sectors. It also supplies natural gas and power in the United States and Europe along with a suite of other sustainability-related products and services. Its segments include Aviation, Land and Marine. Its Aviation segment provides aviation-related service offerings, which include fuel management, price risk management, ground handling, 24/7 global dispatch services, and trip planning services, including flight planning and scheduling, weather reports and overflight permits. Its Land segment offers fuel, lubricants, heating oil, and related products and services to commercial, industrial, residential and government customers, as well as retail petroleum operators. Its Marine segment markets fuel, lubricants, and related products and services to a base of marine customers.

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.

World Kinect Corporation has a Value Score of 87, which is considered to be undervalued.

World Kinect Corporation’s price-earnings ratio is 28.4 compared to the industry median at 10.7. This means that it has a higher price relative to its earnings compared to its peers. This makes World Kinect Corporation less attractive for value investors.

World Kinect Corporation’s price-to-book ratio is higher than its peers. This could make World Kinect Corporation less attractive for value investors when compared to the industry median at 1.88.

You can read more about World Kinect Corporation’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.

• Delek US Holdings Inc stock has a Value Grade of A.
• Phillips 66 stock has a Value Grade of B.
• World Kinect Corporation 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, June 04
• 5 Undervalued Oil & Gas - Refining and Marketing Stocks for Monday, June 03
• Why Par Pacific Holdings Inc’s (PARR) Stock Is Down 4.79%
• Why Star Group LP’s (SGU) Stock Is Up 5.22%

AAII Disclaimer

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