In this article, we discuss 10 best oil refinery stocks to buy. If you want to see more stocks in this selection, check out 5 Best Oil Refinery Stocks To Buy.
Oil refining refers to the treatment of crude oil after extraction to obtain high-quality oil components that are free of any impurities. Global refined oil product markets are likely to remain constrained until mid-decade, and the global downstream sector is facing meaningful near, intermediate, and long-term challenges, as per a new report published by S&P Global and the International Energy Forum. According to an Oil Refining Industry Insights report, in 2020, the global oil refining capacity declined for the first time in 20 years and this trend continued in 2021, given the aftermath of the COVID-19 pandemic, high refinery closures, and transformations to biofuels or distribution terminals.
The global oil refining market was worth $1,345 billion in 2020, and it is expected to be valued at $3,751.5 billion by 2030, indicating a compound annual growth rate of 5.3% during the forecast period of 2021 to 2030. The global demand for oil refining is driven by the increase in world population and consequent urbanization, expansion and upgradation of refineries to meet higher demand for oil and oil derivative products, increased aviation and transportation, and the development of emerging economies.
Some of the major African countries, such as Nigeria and Algeria, are attempting to become some of the largest regional hubs for refineries in the near future. Asia-Pacific is forecasted to remain a primary player in the oil refining market, and the region accounted for about 26.3% of the total global refining output as of 2021. It is expected to remain a major region given the planned refinery projects in China and India. Some of the best oil refinery stocks to buy include Marathon Petroleum Corporation (NYSE:MPC), Shell plc (NYSE:SHEL), and Phillips 66 (NYSE:PSX).
Our Methodology
We selected the following oil refinery stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
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Best Oil Refinery Stocks To Buy
10. Clean Energy Fuels Corp. (NASDAQ:CLNE)
Number of Hedge Fund Holders: 16
Clean Energy Fuels Corp. (NASDAQ:CLNE) was incorporated in 2001 and is headquartered in Newport Beach, California. Clean Energy Fuels Corp. (NASDAQ:CLNE) offers natural gas as an alternative fuel for vehicles and related fueling solutions in the United States and Canada. It supplies renewable natural gas, compressed natural gas, and liquefied natural gas for medium and heavy-duty vehicles.
On November 8, Clean Energy Fuels Corp. (NASDAQ:CLNE) reported a Q3 non-GAAP EPS of $0.06, beating market estimates by $0.02. The revenue came in at $125.7 million, up 46% on a year-over-year basis, outperforming Wall Street forecasts by $0.94 million. The company sold 54.1 million gallons of renewable natural gas in the third quarter of 2022, indicating a 28.2% increase compared to the third quarter of 2021.
UBS analyst Manav Gupta initiated coverage of Clean Energy Fuels Corp. (NASDAQ:CLNE) on December 13 with a Buy rating and a $12 price target, demonstrating 110% upside from current levels. The analyst sees dairy renewable natural gas as a “strong and viable solution” that reduces both emissions and fuel expenses. Clean Energy Fuels Corp. (NASDAQ:CLNE) is best positioned to benefit from larger adoption of dairy RNG in the transportation sector, the analyst wrote in a research note.
According to Insider Monkey’s data, 16 hedge funds were bullish on Clean Energy Fuels Corp. (NASDAQ:CLNE) at the end of the third quarter of 2022 with collective stakes worth $52 million, compared to 15 funds in the prior quarter worth $34 million. D E Shaw is the leading stakeholder of the company, with 3.8 million shares valued at $20.8 million.
Like Marathon Petroleum Corporation (NYSE:MPC), Shell plc (NYSE:SHEL), and Phillips 66 (NYSE:PSX), Clean Energy Fuels Corp. (NASDAQ:CLNE) is one of the premier oil refinery stocks to monitor.
9. Par Pacific Holdings, Inc. (NYSE:PARR)
Number of Hedge Fund Holders: 23
Par Pacific Holdings, Inc. (NYSE:PARR) is a Texas-based company that owns and operates energy and infrastructure businesses. The company operates through three segments – Refining, Retail, and Logistics. The Refining segment manages three refineries that produce ultra-low sulfur diesel, gasoline, jet fuel, marine fuel, distillate, asphalt, low sulfur fuel oil, and other associated refined products for customers in Hawaii, Pacific Northwest, Wyoming, and South Dakota. It is one of the best oil refinery stocks to invest in.
On November 1, Par Pacific Holdings, Inc. (NYSE:PARR) reported Q3 non-GAAP earnings per share of $2.88 and a revenue of $2.06 billion, outperforming Wall Street forecasts by $0.87 and $370 million, respectively. Revenue for the period climbed 57.3% on a year-over-year basis.
Piper Sandler analyst Ryan Todd on November 9 raised the price target on Par Pacific Holdings, Inc. (NYSE:PARR) to $29 from $22 and maintained a Neutral rating on the shares. Despite investor concerns of a “one off” uplift to refining margins in 2022, latest earnings results from independent refiners and “persistent systemic tightness have made it abundantly clear that global tightness in refined product markets is likely to persist for quite some time,” the analyst told investors in a research note. He raised his 2023 outlook for refining margins to within 10% of 2022 margins.
According to the third quarter database of Insider Monkey, 23 hedge funds held stakes worth $240.7 million in Par Pacific Holdings, Inc. (NYSE:PARR), compared to the same number of funds in the prior quarter worth $228 million. David Rosen’s Rubric Capital Management is the leading position holder in the company, with 3.70 million shares valued at $60.7 million.
8. Delek US Holdings, Inc. (NYSE:DK)
Number of Hedge Fund Holders: 27
Delek US Holdings, Inc. (NYSE:DK) was founded in 2001 and is headquartered in Brentwood, Tennessee. The company specializes in the integrated downstream energy business in the United States, operating through three segments – Refining, Logistics, and Retail. The Refining division processes crude oil and other feedstock for the manufacture of different grades of gasoline, diesel fuel, aviation fuel, asphalt, and other petroleum-based products. It owns and operates four independent refineries located in Texas, Arkansas, and Louisiana, as well as three biodiesel facilities.
On November 1, Delek US Holdings, Inc. (NYSE:DK) declared a $0.21 per share quarterly dividend, a 5% increase from its prior dividend of $0.20. The dividend was distributed to shareholders on December 2. The Q3 2022 revenue climbed 79.7% year-over-year to $5.32 billion, beating market estimates by $1.63 billion. For Q4 2022, Delek US Holdings, Inc. (NYSE:DK) expects share buybacks of $75 million to $100 million, debt reduction of $100 million to $150 million, and a $0.01 per share dividend hike. The company is also seeking opportunities to shrink its cost structure and improve the efficiency of its portfolio, making it one of the premier oil refinery stocks to consider.
Investment advisory Piper Sandler on November 9 raised the firm’s price target on Delek US Holdings, Inc. (NYSE:DK) to $50 from $44 and reiterated an Overweight rating on the shares. Analyst Ryan Todd issued the ratings update.
According to Insider Monkey’s third quarter database, 27 hedge funds held stakes worth $270.3 million in Delek US Holdings, Inc. (NYSE:DK), compared to 28 funds in the prior quarter worth $247.7 million.
7. PBF Energy Inc. (NYSE:PBF)
Number of Hedge Fund Holders: 32
PBF Energy Inc. (NYSE:PBF) is a New Jersey-based company that engages in refining and supplying petroleum products. It produces gasoline, ultra-low sulfur diesel, heating oil, diesel fuel, jet fuel, lubricants, petrochemicals, asphalt, unbranded transportation fuels, petrochemical feedstocks, blending components, and other petroleum products. The company sells its products in the Northeast, Midwest, Gulf Coast, and West Coast of the United States, as well as in other regions of the United States, Canada, and Mexico. It is one of the best oil refinery stocks to monitor.
On December 12, PBF Energy Inc. (NYSE:PBF) announced that its board authorized the repurchase of up to $500 million of its class A stock, which led its shares 7.3% higher. On November 30, PBF Energy Inc. (NYSE:PBF) disclosed the conclusion of its acquisition of all common units in PBF Logistics it did not already own, after more than two-thirds of issued and outstanding PBF Logistics common unitholders voted to authorize the merger proposal.
Piper Sandler analyst Ryan Todd raised the price target on PBF Energy Inc. (NYSE:PBF) to $69 from $53 and reiterated an Overweight rating on the shares on November 9.
According to Insider Monkey’s September quarter data, PBF Energy Inc. (NYSE:PBF) was part of 32 hedge fund portfolios, compared to 31 in the last quarter. The combined stakes in Q3 2022 increased to $508.75 million from $494.2 million in Q2. Israel Englander’s Millennium Management held the biggest stake in the company, with 2.3 million shares worth $82.3 million.
6. HF Sinclair Corporation (NYSE:DINO)
Number of Hedge Fund Holders: 33
HF Sinclair Corporation (NYSE:DINO) was incorporated in 2021 and is headquartered in Dallas, Texas. It is an independent energy company that produces and markets gasoline, diesel fuel, jet fuel, renewable diesel, specialty lubricant products, specialty chemicals, and specialty and modified asphalt. The company also owns and operates refineries located in Kansas, Oklahoma, New Mexico, Utah, Washington, and Wyoming. HF Sinclair Corporation (NYSE:DINO) markets its refined products in the Southwest United States and Rocky Mountains, Pacific Northwest, and in other neighboring Plains states.
On November 7, HF Sinclair Corporation (NYSE:DINO) reported a Q3 non-GAAP EPS of $4.58, beating Wall Street estimates by $0.36. The revenue of $10.6 billion climbed 126% year-over-year, exceeding market consensus by $1.88 billion. The company cited robust product margins and record throughputs in its refining segment for the solid third quarter results. HF Sinclair Corporation (NYSE:DINO) also distributed a $0.40 per share quarterly dividend on December 5.
Cowen analyst Jason Gabelman on November 8 raised the price target on HF Sinclair Corporation (NYSE:DINO) to $68 from $60 and kept an Outperform rating on the shares. The analyst noted that the company wants to continue to repurchase stock at an elevated pace until the payout ratio kicks in Q2, though he believes the buyback will significantly be dictated by third party selling.
According to Insider Monkey’s third quarter data, 33 hedge funds were bullish on HF Sinclair Corporation (NYSE:DINO), with collective stakes worth $477 million, compared to the same number of funds in the prior quarter worth $450 million. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 1.16 million shares amounting to $62.5 million.
In addition to Marathon Petroleum Corporation (NYSE:MPC), Shell plc (NYSE:SHEL), and Phillips 66 (NYSE:PSX), HF Sinclair Corporation (NYSE:DINO) is one of the top oil refinery stocks to invest in.
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Disclosure: None. 10 Best Oil Refinery Stocks To Buy is originally published on Insider Monkey.