3SOF

You know I'm bearish on the oil price and oil related stocks. But I found one that is irresistible, altough it is already trading above $100.

Why? Because it is still probably the cheapest stock on the S&P500.

Please consider the company's 3rd quarter results: Valero Energy Corporation Reports Third Quarter Earnings; Ninth Consecutive Quarter of Record Results

«SAN ANTONIO, Oct 31, 2005 (BUSINESS WIRE) -- Valero Energy Corporation (VLO) today reported net income for the third quarter of 2005 of $1.3 billion, or $4.37 per share, compared to $434 million, or $1.57 per share, for the same period last year. »

If there's no earnings growth, the company will make a profit of $17.48/share in the upcoming year. That would translate into a P/E of 6  

But IF there's earnings growth, and read this:

«Given all these positive factors, it's clear that the current First Call consensus estimate of $3.67 per share for the fourth quarter is significantly too low. In fact, we estimate that in October alone we will earn around $2.30 per share.»

If they continue the October pace, they would earn $6.9/share in the fourth quarter alone. That would mean 2005 earnings would be $16.32, so the trailing P/E of this company is 6.45, which is extremely low.

If oil prices don't collapse in the coming quarters VLO will easily double. The company will make a 2 for 1 stock split in December, so I don't need to see $210 to double my money.

I'll buy VLO for the 3 Stocks on Fire Portfolio at today's open, 6.66% of capital as usual.

Cramer said to load up the truck with VLO under $100. Excellent buy !

I have it from 78$..... I dont have more green to put into it... 

David, according with this the oil will be bottoming by end year + or -.. @ $55. I think I'll wait until then to join whit this oil related stoks..

http://www.kitco.com/ind/Hamilton/oct212005.html

Quote from: REALDEALS21 on November 01, 2005, 08:28:08 AM
Cramer said to load up the truck with VLO under $100. Excellent buy !

Thanks RealDeal21, I didn't know he was bullish on VLO.

Quote from: dhiraj19 on November 01, 2005, 10:14:29 AM
I have it from 78$..... I dont have more green to put into it...

Cut the losses and let the profits run and more green will come to you 

Quote from: Gu$tavo on November 01, 2005, 11:38:19 AM
David, according with this the oil will be bottoming by end year + or -.. @ $55. I think I'll wait until then to join whit this oil related stoks..

http://www.kitco.com/ind/Hamilton/oct212005.html

That's ok Gu$tavo, but I feel VLO will trend higher regardless of the oil price. It is way undervalued at this point.

I'll hold VLO.

Ahh, it feels good to own something above $100, even though for someone without stock market experience it would be hard to believe.

I think VLO is way undervalued at this point, the short and long term trends are bullish and I'll continue holding it for the foreseeable future.

VLO is a great play in progress, so much support as well just above $100 also made it a very positive risk reward entry. My stop is already nearly at my entry price trailing the supporting averages, ahh if only all trades went that way so quickly LOL.
Anyway a look to my weekly chart shows me that VLO has tested the mid point of the bollinger bands twice and both times it quickly recovered and then set upon a 3 then 4 month runs to double each time (see chart). The stock market has a habit of repeating itself, so that's $200 in February.........

Still was not able to get my order filled  . Now I'm doubting  . Wait or get in at $ 111,-

Anybody else wrestling with that question or opinions on it?

Would like to hear.

Amarens

$200 in February? I could live with that  Nice chart Aussie !

Quote from: Amarens on November 04, 2005, 03:10:11 AM
Still was not able to get my order filled . Now I'm doubting . Wait or get in at $ 111,-

Anybody else wrestling with that question or opinions on it?

Would like to hear.

Amarens

Lesson for the future: when you want to buy, you buy it. Buy at the offer, buy at the market, buy with a limit order given that limit is above the offer price (recommended), but buy it !

It doesn't make any sense trying to grab a few more ticks and waist the big move.

But of course, you know this already, after letting this one go ... forget about the past, and about the future, think only of now. Do you want to buy it now?

Well, I would. The trend is bullish and I see this breaking out to new highs above $117 soon. If we get a close above $117.25 with volume above average, that would trigger a technical target of 142.79.

All this doesn't mean I'm not free to sell next week at $108. At this precise moment, I can only see higher prices coming for VLO (of course, there will be down days along the way, but no one needs to pick the bottom to win, usually you don't win when you try to buy stocks at  a low point), but that can change.

I wish you good luck Amarens, I will continue holding VLO.

QuoteAll this doesn't mean I'm not free to sell next week at $108. At this precise moment, I can only see higher prices coming for VLO (of course, there will be down days along the way, but no one needs to pick the bottom to win, usually you don't win when you try to buy stocks at  a low point), but that can change.

Look how fast things change man 

While I was making the update on RDCM I remembered that I didn't check for any news or SEC filings on VLO (I do that for every stock before the update, to see if there's something new on the fundamental front).

It's incredible, but the company is calling for an extraordinary shareholders meeting, on December 1, 2005, to increase the number of authorized shares from 600,000,000 to 1,200,000,000 

For now they have just 261.77M shares issued and outstanding, so why this increase?

From penny stock trading we know this probably means dilution in the future. In the SEC filing, it says that «if you don't vote, that will be taken as an «approval», and the company didn't issue any press release about it, it's not on Yahoo, not on Market watch, probably just on www.sec.gov (I have a paid service that collects these SEC filings just in time for me).

So, 15 minutes ago I was saying this was going to $200. Now I see that it can go to $200 without leaving $100. It may even go to $200 while it goes down to $50.

Do you understand what I mean? If you don't, please say so.

Taking all this in consideration, and thinking that not much people already knows this since it isn't published on general media, I'll take profits on VLO at today's open !

Just a silly question David,

Would it be a good idea to purchase Jan'06 puts for VLO at 110?  Only question is if it splits 2 for 1 does this mean 110 is 55 or 220?

Thanks for all your help.

Have a GRRRRRRRREAT DAY !!!!

QuoteJust a silly question David

I love silly questions 

QuoteWould it be a good idea to purchase Jan'06 puts for VLO at 110?

Arrrghh, even if that may be a good idea for the short term, just the thought of buying puts and calls brings me nauseas. Many of my friends lost it all trading warrants and options. I know a guy who didn't knew anything about trading. The man lost his family's entire fortune (more than $5M) buying Nasdaq calls when the market was going down in 2001.

So, if you want to be trading 2 or 3 years from now, I would avoid trading puts and calls. Why not just short the stock, with much less leverage? (I'm not inclined to short either).

But thanks for asking, good luck 

QuoteOnly question is if it splits 2 for 1 does this mean 110 is 55 or 220?

It would go to $55, but that doesn't mean anything, the people who own the shares would get double the number of their shares. Say, if you have 100 shares at $110, you would have 200 shares if a 2 for 1 stock split occurs.

That's not what I was talking about, don't confuse stock split with dilution. If the stock splits 2 for 1 and the number of outstanding shares, for example, doubles, the stock price would go down to $27.5 without any change in the overall value of the company (the market cap).

QuoteThanks for all your help.

Just keep those questions coming 

I have to send the newsletter and have lunch now, good trades !

Guess I didn't explain my 110 splits 2 for 1 question.

I understand there is no difference for people who own the stock, but do options adjust as well.

For example, if you have (1) Jan 110 put and the stock splits 2 for 1 do you now have (2) Jan 55 puts.  It only seems logical, but sometimes my logic fails me.

Hope lunch was GRRRRREAT !!!

Options do the same they adjust in accordance with the split as they are tracking the underlying instrument (the stock).
Good Luck

By the way I also sold this morning following the SEC filing on the authorised share increase, which is a real shame as I was looking forward to $200 in Feb

Sold it.