Tesla Motors Inc (TSLA), Valero Energy Corporation (VLO), Exxon Mobil Corporation (XOM): Is America Creating an Oil Bubble?

The firm’s balance sheet is clean with a total debt to equity ratio of 0.37. Its return on investment (ROI) of 12.8%, EBIT margin of 3.9%, and profit margin of 2.3% could be a tad higher, but the company does offer a nice yearly dividend of $0.80. Also, as Valero Energy Corporation (NYSE:VLO) builds out its new hydrocrackers its margins should increase.

Exxon Mobil Corporation (NYSE:XOM) is another good investment to look at. It owns a number of legacy fields in the U.S. that help to keep costs down. Unlike smaller firms focused in high-cost areas, a drop in WTI will not destroy Exxon Mobil Corporation (NYSE:XOM)’s profits. The company has significant refinery operations to stabilize earnings. Just like Valero Energy Corporation (NYSE:VLO), it is able to benefit from cheap U.S. crude prices by selling refined products overseas. Even in 2009 when the price of WTI had fallen significantly, Exxon Mobil Corporation (NYSE:XOM) produced an EBIT of $35.33 billion.

The company has a clean balance sheet with a total debt to equity ratio of 0.08. Its ROI of 27.3%, EBIT margin of 16.6%, and profit margin of 10.2% are very strong, and they give the profits the company needs to maintain its operations.

Conclusion

America’s crude production and inventories are increasing, while its consumption and imports are falling. A crude bust may be in the works. It is a good idea to protect yourself with dependable refiners like Valero Energy Corporation (NYSE:VLO) and Exxon Mobil Corporation (NYSE:XOM). Tesla Motors Inc (NASDAQ:TSLA) is an important company to watch, but until its profits are more secure it remains very risky.

The article Is America Creating an Oil Bubble? originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors (NASDAQ:TSLA). The Motley Fool owns shares of Tesla Motors. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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