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 Thursday, September 19, 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.
| Company | Ticker | Price/Sales | Price/Earnings | EV/EBITDA | Shareholder Yield | Price/Book Value | Price/Free Cash Flow | Value Grade |
| CVR Energy, Inc. | CVI | 0.28 | 4.4 | 5.8 | 8.4% | 2.83 | 27.3 | A |
| Imperial Oil Ltd (USA) | IMO | na | na | na | 8.3% | 2.04 | 15.1 | B |
| Suburban Propane Partners LP | SPH | 0.85 | 11.7 | 9.2 | 6.6% | 1.88 | 24.4 | B |
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.
CVR Energy, Inc.’s Value Grade
Value Grade:
A
B
C
D
F
81-100
Deep
Value
61-80
Value
41-60
Average
21-40
Expensive
0-20
Ultra
Expensive
| Metric | Score | CVI | Industry Median |
| Price/Sales | 11 | 0.28 | 0.25 |
| Price/Earnings | 4 | 4.4 | 8.8 |
| EV/EBITDA | 20 | 5.8 | 6.0 |
| Shareholder Yield | 8 | 8.4% | 5.2% |
| Price/Book Value | 68 | 2.83 | 1.53 |
| Price/Free Cash Flow | 63 | 27.3 | 10.7 |
CVR Energy, Inc. is a diversified holding company primarily engaged in the renewable fuels and petroleum refining and marketing businesses, as well as in the nitrogen fertilizer manufacturing business through its interest in its subsidiary, CVR Partners, LP (CVR Partners). The Company operates through two segments: Petroleum and Nitrogen Fertilizer. Petroleum Segment refines and markets high-value transportation fuels primarily in the form of gasoline and diesel fuels. Petroleum Segment is composed of the assets and operations of two refineries located in Coffeyville, Kansas and Wynnewood, Oklahoma and supporting logistics assets in the region. Nitrogen Fertilizer segment produces and markets nitrogen fertilizers in the form of urea and ammonium nitrate (UAN) and ammonia. The Company’s Nitrogen Fertilizer Segment is composed of the assets and operations of CVR Partners, including two nitrogen fertilizer manufacturing facilities located in Coffeyville, Kansas and East Dubuque, Illinois.
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.
CVR Energy, Inc. has a Value Score of 85, which is considered to be undervalued.
When you look at CVR Energy, Inc.’s price-to-sales ratio at 0.28 compared to the industry median at 0.25, this company has a higher price relative to revenue compared to its peers. This could make CVR Energy, Inc.’s stock less attractive for value investors.
CVR Energy, Inc.’s price-earnings ratio is 4.40 compared to the industry median at 8.84. This means it has a lower share price relative to earnings compared to its peers. This could make CVR Energy, Inc. more attractive for value investors.
Now, let’s assess CVR Energy, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 5.8, when compared to the industry median of 6.0, 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. CVR Energy, Inc.’s shareholder yield is higher than its industry median ratio of 5.23%. 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. CVR Energy, Inc.’s price-to-book ratio is higher than its industry median ratio of 1.53. This could make CVR Energy, Inc. less attractive to investors looking for a new addition to their portfolio.
Lastly, let’s take a look at CVR Energy, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. CVR Energy, Inc.’s price-to-free-cash-flow ratio is higher than its industry median ratio of 10.71. This could make CVR Energy, Inc. less attractive because the higher P/FCF ratio indicates that CVR Energy, 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.
Imperial Oil Ltd (USA)’s Value Grade
Value Grade:
A
B
C
D
F
81-100
Deep
Value
61-80
Value
41-60
Average
21-40
Expensive
0-20
Ultra
Expensive
| Metric | Score | IMO | Industry Median |
| Price/Sales | na | na | 0.25 |
| Price/Earnings | na | na | 8.8 |
| EV/EBITDA | na | na | 6.0 |
| Shareholder Yield | 8 | 8.3% | 5.2% |
| Price/Book Value | 57 | 2.04 | 1.53 |
| Price/Free Cash Flow | 41 | 15.1 | 10.7 |
Imperial Oil Limited is an integrated oil company. It 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. In Canada, it is a producer of crude oil, a petroleum refiner, a marketer of petroleum products, and a producer of petrochemicals. Its segments include Upstream operations, which include the exploration for, and production of, crude oil, natural gas, synthetic crude oil and bitumen; Downstream operations, which consist of the transportation and refining of crude oil, blending of refined products and the distribution and marketing of those products; and Chemical operations, which consist of the manufacturing and marketing of various petrochemicals. Its operations include Cold Lake, Kearl, Nanticoke, Sarnia and Strathcona refinery. Its products and services include Asphalt, Chemical products, Esso and Mobil stations, Esso Commercial Cardlocks, Lubricants, Safety Data Sheets and others.
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 (USA) has a Value Score of 73, which is considered to be undervalued.
Imperial Oil Ltd (USA)’s price-to-book ratio is lower than its peers. This could make Imperial Oil Ltd (USA) more attractive for value investors when compared to the industry median at 1.53.
You can read more about Imperial Oil Ltd (USA)’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.
Suburban Propane Partners LP’s Value Grade
Value Grade:
A
B
C
D
F
81-100
Deep
Value
61-80
Value
41-60
Average
21-40
Expensive
0-20
Ultra
Expensive
| Metric | Score | SPH | Industry Median |
| Price/Sales | 30 | 0.85 | 0.25 |
| Price/Earnings | 27 | 11.7 | 8.8 |
| EV/EBITDA | 43 | 9.2 | 6.0 |
| Shareholder Yield | 11 | 6.6% | 5.2% |
| Price/Book Value | 53 | 1.88 | 1.53 |
| Price/Free Cash Flow | 59 | 24.4 | 10.7 |
Suburban Propane Partners, L.P. is a nationwide distributor of propane, renewable propane, renewable natural gas, fuel oil and related products and services, as well as a marketer of natural gas and electricity and investor in low carbon fuel alternatives. The Company’s segments include propane, fuel oil and refined fuels, natural gas and electricity, and all other. The propane segment is engaged in the retail distribution of propane and renewable propane to residential, commercial, industrial, agricultural and government customers and, to a lesser extent, wholesale distribution to large industrial end users. The fuel oil and refined fuels segment is engaged in the retail distribution of fuel oil, diesel, kerosene and gasoline. The natural gas and electricity segment is engaged in the marketing of natural gas and electricity to residential and commercial customers in the deregulated energy markets of New York and Pennsylvania. The all other segment includes its service business.
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.
Suburban Propane Partners LP has a Value Score of 69, which is considered to be undervalued.
Suburban Propane Partners LP’s price-earnings ratio is 11.7 compared to the industry median at 8.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Suburban Propane Partners LP less attractive for value investors.
Suburban Propane Partners LP’s price-to-book ratio is lower than its peers. This could make Suburban Propane Partners LP more attractive for value investors when compared to the industry median at 1.53.
You can read more about Suburban Propane Partners LP’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.
- CVR Energy, Inc. stock has a Value Grade of A.
- Imperial Oil Ltd (USA) stock has a Value Grade of B.
- Suburban Propane Partners LP stock has a Value Grade of B.
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.
AAII Disclaimer
We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.
