We recently published a list of Jim Cramer Says These 10 Stocks Will Go Higher in Trump Presidency. In this article, we are going to take a look at where Valero Energy Corporation (NYSE:VLO) stands against other stocks that will go higher in Trump presidency according to Jim Cramer.
In a recent program, Jim Cramer celebrated the market’s rally on Donald Trump’s election victory, saying the market likes Trump.
“The market likes Donald J. Trump, and it loves a peaceful transition to the next president. We got both, and we had a monster celebration. It was a full jailbreak, and the bears never knew what trampled them. Now, though, with the inclusion of this amazing session, we have to ask: have you missed the Trump rally?”
Cramer said the answer to the question of whether you missed the Trump rally lies in the stock you have in your mind. He said many were expecting a contested election and there was a lot of uncertainty around transition. However, that did not happen and that was in itself a win for the market.
“Trump wants to cut taxes—all taxes—including corporate taxes. Some numbers go higher, estimates go higher, earnings-per-share go higher. You do need to see interest rates go low for things to really work. Someday this is going to matter. It’s hard to keep doing this and piling on debt. But party on until we see damage; that’s what it felt like to me, seems to be the mantra.”
Cramer said the market is still “oversold” as many Trump stocks underwent a massive selloff after Kamala Harris reportedly started to gain ground. However, Cramer said the polls were again proved wrong.
Cramer then talked about the stocks that investors can buy to ride the Trump rally.
READ ALSO Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks
For this article we watched the latest programs of Cramer and picked stocks he believes can go higher under the Trump presidency. With each company, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Investors: 45
Valero Energy Corporation (NYSE:VLO) is one of the stocks Jim Cramer likes after Donald Trump’s victory in the elections.
“I like the refiners, think Valero, Phillips 66 and Marathon P. Because I thought we were gonna have a Democratic field day against these three, no, not going to happen, no.”
Valero Energy Corporation (NYSE:VLO) has posted YTD earnings of $6.6 per share, with prices slightly below the 10-year annual range. This suggests an average annualized EPS of $9-10, placing Valero Energy Corporation (NYSE:VLO) at the lower end of a teen P/E ratio, which is a more reasonable valuation, assuming a margin recovery.
Despite Trump’s victory, the stock could see volatility ahead due to high supply and weak demand. Plans to increase drilling could add to supply, pushing down prices and spreads, potentially impacting Valero Energy Corporation (NYSE:VLO)’s recovery.
California’s anti-refining stance could push the state to raise inventories, and Valero Energy Corporation (NYSE:VLO) has considered closing refineries there. Valero Energy Corporation (NYSE:VLO) has also faced over $80 million in fines for air quality violations. However, the risks are overstated, as new refinery construction is restricted in California, giving Valero Energy Corporation (NYSE:VLO) a dominant position. This is why its West Coast division earns 70% higher profits than other regions. While the company opposes policies threatening this advantage, it would likely avoid shutting profitable refineries, so concerns here seem exaggerated.
Overall, VLO ranks 7th on our list of stocks that will go higher in Trump presidency according to Jim Cramer. While we acknowledge the potential of VLO, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
