Top 12 Oil and Gas Stocks To Invest In According to Hedge Funds

9. Valero Energy Corporation (NYSE:VLO) 

Number of Hedge Fund Holders: 49

Next on our list of the Best Energy Stocks is Valero Energy Corporation (NYSE:VLO), the largest independent petroleum refiner in the world and an international distributor and marketer of transportation fuels. It runs 15 refineries in the US, Canada, and the UK with a combined daily throughput capacity of 3.2 million barrels.

Valero Energy Corporation (NYSE:VLO) reported a widely expected plunge in its Q3 2024 profits, but still managed to exceed Wall Street analysts’ expectations. The refining giant posted an EPS of $1.14 for Q3, down by a significant 86% YoY. Yet, the earnings per share for the quarter beat the analysts’ consensus estimate of $0.98. It must be kept in mind that all American refiners were expected to report a plunge in profitability for Q3, as refining margins slumped to multi-year lows amid tepid fuel demand and increased global fuel supply. However, despite the declining margins and earnings, Valero remains committed to a through-cycle minimum annual shareholder payout ratio of 40 to 50%.

Although the transition away from fossil fuels threatens to reduce oil demand, Valero Energy Corporation (NYSE:VLO) has adapted well by taking advantage of the growing scarcity of refining capacity around the globe. Other industry giants continue to shut down their refineries, offering the potential for a stronger uptick in refining margins. This puts Velo, and its low-fixed-cost refineries, in a favorable position. The restrictions on building new refineries in California also put Valero Energy Corporation (NYSE:VLO) in a dominant position, as its West Coast division earns 70% higher profits than other regions. Moreover, the company remains committed to expanding its low-carbon fuels business and its investment in the Diamond Green Diesel SAF project is a key part of its efforts to diversify and reduce its dependence on traditional refining business.

 Valero Energy Corporation (NYSE:VLO) is included among the Stocks that Jim Cramer Says Will Go Higher in the Trump Presidency.