GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Phillips 66 looks expensive against its earnings at 15x trailing and 10x next year's, while oil and gas producers usually get 9x. Applying 9x to mid-cycle EPS of $15.31, give or take 12%, puts fair value at $120.49 to $153.35, so $264.58 is 73% above the top of that range. Trailing and forward earnings differ by 50%, so the range is wide, and this is a valuation read only, not fundamental work. x.com
Shell's stronger refining profits and larger buyback support the view that its breakout holds. Q3 adjusted earnings reached $10.8 billion versus $9.9 billion expected, as refining margins hit a record $42 a barrel; the three-month buyback rises from $3 billion to $5 billion. Those margins will not last forever. x.com
Marathon Petroleum's earnings are impressive at $17 a share, and Q3 should be better. The open question is whether it can reach $25 a share and sustain that for a few quarters. x.com
Low forward earnings multiples alongside strong investor sentiment put these S&P 500 stocks atop the smart-value ranking. APA, Viatris, EOG, Marathon Petroleum, Valero, Phillips 66, Allstate, Diamondback, Everest and Centene trade at 6-15x forward earnings after one-year gains of 17-150%; the accompanying ranking also weighs free-cash-flow yield and momentum. x.com
Par Pacific Holdings, a refiner, is a new addition as the portfolio itself gets refined. x.com
EQT, Range Resources, Expand Energy, Magnolia Oil & Gas and EOG Resources are cyclicals catching an earnings tailwind before the crowd notices, the setup Peter Lynch loved. They passed a screen alongside Coterra, all natural gas or oil producers with disciplined balance sheets and forward P/Es of 9-12. x.com
Refiners Marathon Petroleum, Valero and Phillips 66 are back at the top of S&P 500 momentum rankings as earnings surge. The three earned a combined $12.6 billion in Q2, the most since Russia invaded Ukraine in 2022, with Marathon and Valero scoring 100 on momentum and Phillips 66 scoring 99. x.com
US energy stocks are being steadily accumulated after a 17-year base, and that base will not resolve in a month. The sector broke out this year and pulled back on contracting volume, which is digestion, not distribution. Energy trades near 13x earnings versus about 20x for hyperscalers. Stocks now rise with oil and get bought back when oil falls. Tech is priced for the cost of capital to come down; energy for the reason it will not. x.com x.com x.com
