S&P Global Market Intelligence’s Jeffrey Loo explains why he’s maintaining his Buy rating on Valeant Pharmaceuticals International (VRX) following reports it had rejected a takeover bid earlier this year:
According to unconfirmed reports, including the Wall Street Journal,Valeant rejected an unsolicited joint takeover bid from Takeda Pharmaceutical, the largest Japanese drug firm, and private equity firm TPG. The offer didn’t include a firm price and came before Joseph Papa was named Valeant’s new CEO. We aren’t surprised by the inquiry as we believeValeant has attractive assets and we view the shares as undervalued. We think news of the proposal may potentially lead to other bidders stepping forward. But we would not be surprised ifValeant sells off assets to raise cash to help de-leverage.
Best Prefered Stocks To Invest In Right Now: Phillips 66(PSX)
Phillips 66, incorporated on November 10, 2011, is an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S).
The Company gathers, processes, transports and markets natural gas, and transports, fractionates and markets natural gas liquids (NGLs) in the United States. In addition, this segment also transports crude oil and other feedstocks to its refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Midstream segment includes, among other businesses, the Company’s equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstr eam and NGL.
The transportation business line transports crude oil and other feedstocks to its refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The operations of its master limited partnership, Phillips 66 Partners LP, are included in the transportation business line. The DCP Midstream business line gathers, processes, transports and markets natural gas, and transports, fractionates and markets NGL.
The Company owns or leases assets to provide delivery and storage of crude oil, refined products, natural gas and NGL. These assets include pipeline systems; petroleum product, crude oil and liquefied petroleum gas (LPG) terminals; a petroleum coke handling facility; marine vessels, and railcars and trucks. Its transportation business manages over 18,000 miles of crude oil, natural gas, NGL and petroleum products pipeline systems in the United States , including those partially owned or operated by affiliates.! The Company owns or operates over 40 finished product terminals, 40 storage locations, five LPG terminals, 20 crude oil terminals and one petroleum coke exporting facility. It has interest in Rockies Express Pipeline LLC (REX). The REX natural gas pipeline runs over 1,710 miles from Meeker, Colorado, to Clarington, Ohio, and has a natural gas transmission capacity of over 1.8 billion cubic feet per day (BCFD), with most of its system having a pipeline diameter of over 40 inches. The REX pipeline is designed to enable natural gas producers in the Rocky Mountain region to deliver natural gas supplies to the Midwest and eastern regions of the United States.
The Company owns a limited partner interest in Phillips 66 Partners, which is a master limited partnership formed to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and NGL pipelines and terminals, as well as other transportation and midstream assets. Phillips 66 Partn ers’ assets consist of crude oil and refined petroleum product pipeline, terminal, rail rack and storage systems in the Central, Gulf Coast, Atlantic Basin and Western regions of the United States. Its vessels are used primarily to transport feedstocks or provide product transportation for certain of its refineries, including delivery of domestic crude oil to its Gulf Coast and East Coast refineries. Truck and rail operations support the Company’s feedstock and distribution operations. Rail movements are provided via a fleet of over 12,300 owned and leased railcars. Truck movements are provided through approximately 170 third-party truck companies, as well as through Sentinel Transportation LLC, in which the Company holds an equity interest.
Midstream segment includes the Company’s equity investment in DCP Midstream. DCP Midstream owns or operates over 64 natural gas processing facilities, with a net processing capacity of approximately 8.0 BCFD. DCP Midstream’s owned or operated natural gas pipeline systems include gath! ering ser! vices for these facilities, as well as natural gas transmission, and totaled approximately 68,000 miles of pipeline. DCP Midstream also owns or operates over 10 NGL fractionation plants, along with natural gas and NGL storage facilities, a propane wholesale marketing business and NGL pipeline assets. The residual natural gas, primarily methane, which results from processing raw natural gas, is sold by DCP Midstream at market-based prices to marketers and end users, including industrial companies, natural gas distribution companies and electric utilities.
The Company’s NGL business includes its equity interest in Gulf Coast Fractionators, which owns an NGL fractionation plant in Mont Belvieu, Texas. The Company has equity interest in a fractionation plant in Mont Belvieu, Texas, and its net share of capacity is over 30,250 barrels per day. The Company has equity interest in a fractionation plant in Conway, Kansas, and the Company’s net share of capacity is approx imately 43,200 barrels per day. It also has one-third interest in both the DCP Sand Hills and DCP Southern Hills pipeline entities, connecting Eagle Ford, Permian and Midcontinent production to the Mont Belvieu, Texas market.
The Chemical segment manufactures and markets petrochemicals and plastics. The Chemicals segment consists of its equity investment in Chevron Phillips Chemical Company LLC (CPChem). CPChem’s business is structured around two primary operating segments: Olefins and Polyolefins (O&P) and Specialties, Aromatics and Styrenics (SA&S). The O&P segment produces and markets ethylene and other olefin products; the ethylene produced is primarily consumed within CPChem for the production of polyethylene, normal alpha olefins and polyethylene pipe. The SA&S segment manufactures and markets aromatics products, such as benzene, styrene, paraxylene and cyclohexane, as well as polystyrene and styrene-butadiene copolymers. SA&S also m anufactures and/or markets a range of specialty chemical pro! ducts, in! cluding organosulfur chemicals, solvents, catalysts, drilling chemicals and mining chemicals. CPChem, including through its subsidiaries and equity affiliates, has manufacturing facilities located in Belgium, China, Colombia, Qatar, Saudi Arabia, Singapore, South Korea and the United States.
The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products (such as gasolines, distillates and aviation fuels) at over 15 refineries, mainly in the United States and Europe. The Bayway Refinery is located on the New York Harbor in Linden, New Jersey. Bayway refining units include a fluid catalytic cracking unit, over two hydrodesulfurization units, a naphtha reformer, an alkylation unit and other processing equipment. The refinery produces a high percentage of transportation fuels, such as gasoline, diesel and jet fuel, as well as petrochemical feedstocks, residual fuel oil and home heating oil. The complex also includes an approximately 775-million-pound-per-year polypropylene plant.
The Humber Refinery is located on the east coast of England in North Lincolnshire, the United Kingdom. It produces a high percentage of transportation fuels, such as gasoline, diesel and jet fuels. Humber’s facilities encompass fluid catalytic cracking, thermal cracking and coking. This refinery has over two coking units with associated calcining plants, which upgrade the heaviest part of the crude barrel and imported feedstocks into light oil products and graphite and anode petroleum cokes. Approximately 60% of the light oils produced in this refinery are marketed in the United Kingdom, while the other products are exported to the rest of Europe, West Africa and the United States.
The Whitegate Refinery is located in Cork, Ireland. This refinery produces transportation fuels, such as gasoline, diesel and fuel oil, which are distributed to the inland market, as well as being e xported to international markets. The Mineraloelraffinerie O! berrhein ! GmbH (MiRO) refinery, located on the Rhine River in Karlsruhe in southwest Germany, is a joint venture in which the Company owns interest. Facilities include over three crude unit trains, fluid catalytic cracking, petroleum coking and calcining, hydrodesulfurization, naphtha reformer, isomerization, ethyl tert-butyl ether and alkylation units. MiRO also produces a high percentage of transportation fuels, such as gasoline and diesel fuels. Other products include petrochemical feedstocks, home heating oil, bitumen and anode- and fuel-grade petroleum coke. Refined products are delivered to customers in southwest Germany, northern Switzerland and western Austria by truck, railcar and barge.
The Alliance Refinery is located on the Mississippi River in Belle Chasse, Louisiana. The single-train facility includes fluid catalytic cracking units, alkylation, delayed coking, hydrodesulfurization units, a naphtha reformer and aromatics unit. Alliance produces a high percent age of transportation fuels, such as gasoline, diesel and jet fuels. Other products include petrochemical feedstocks, home heating oil and anode-grade petroleum coke.
The Lake Charles Refinery is located in Westlake, Louisiana. Its facilities include fluid catalytic cracking, hydrocracking, delayed coking and hydrodesulfurization units. The refinery produces a high percentage of transportation fuels, such as low-sulfur gasoline and off-road diesel, along with home heating oil. The majority of its refined products are distributed by truck, railcar, barge or major common carrier pipelines to customers in the southeastern and eastern United States. Refined products can also be sold into export markets through the refinery’s marine terminal. Refinery facilities also include a specialty coker and calciner, which produce graphite petroleum coke for the steel industry.
The Sweeny Refinery is located in Old Ocean, Texas, approximately 65 miles southwest of Houston. Refinery facilities include fluid catalytic crackin! g, delaye! d coking, alkylation, a naphtha reformer and hydrodesulfurization units. The refinery receives crude oil primarily via tankers, through wholly and jointly owned terminals on the Gulf Coast, including a deepwater terminal at Freeport, Texas. It produces a high percentage of transportation fuels, such as gasoline, diesel and jet fuels. Other products include petrochemical feedstocks, home heating oil and fuel-grade petroleum coke.
Merey Sweeny, L.P. (MSLP) owns a delayed coker and related facilities at the Sweeny Refinery. MSLP processes long residue, which is produced from heavy sour crude oil, for a processing fee. Fuel-grade petroleum coke is produced as a by-product and becomes the property of MSLP. The Company is the operator and managing partner of WRB Refining LP (WRB), which consists of the Wood River and Borger refineries. WRB’s gross processing capability of heavy Canadian or similar crudes ranges between 235,000 and 255,000 barrels per day. The Company’ s other refineries include Ponca City Refinery, Billings Refinery, Ferndale Refinery, Los Angeles Refinery and San Francisco Refinery.
Marketing and Specialties
The Marketing and Specialties segment purchases for resale and markets refined petroleum products (such as gasolines, distillates and aviation fuels), mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products (such as base oils and lubricants), as well as power generation operations. The Company markets gasoline, diesel and aviation fuel through approximately 8,350 marketer-owned or -supplied outlets in over 50 states of the United States. Its wholesale operations utilize a network of marketers operating approximately 6,700 outlets. In addition, the Company holds brand-licensing agreements with approximately 800 sites. In addition to automotive gasoline and diesel, the Company produces and markets jet fuel and aviation ga soline, which is used by smaller piston-engine aircraft. Avi! ation gas! oline and jet fuel were sold through dealers and independent marketers at approximately 850 Phillips 66-branded locations in the United States.
The Company has marketing operations in over five European countries. The Company uses the JET brand name to market retail and wholesale products in Austria, Germany and the United Kingdom. In addition, a joint venture in which the Company has an equity interest markets products in Switzerland under the Coop brand name. The Company also markets aviation fuels, LPG, heating oils, transportation fuels, marine bunker fuels, bitumen and fuel coke specialty products to commercial customers and into the bulk or spot markets in Austria, Germany, the United Kingdom, Switzerland and Ireland. In addition, through its joint venture operations in Switzerland, the Company has interests in over 295 additional sites.
The Company manufactures and sells a range of specialty products, including petroleum coke products, waxes, solvents and polypropylene. It markets graphite and anode-grade petroleum cokes in the United States and Europe for use in the global steel and aluminum industries. It also markets polypropylene in North America under the COPYLENE brand name. The Company own an interest in Excel Paralubes, a joint venture, which owns a hydrocracked lubricant base oil manufacturing plant located adjacent to the Lake Charles Refinery. This facility produces approximately 22,000 barrels per day of hydrocracked base oils.
The Company manufactures and sells automotive, commercial and industrial lubricants, which are marketed under the Phillips 66, Conoco, 76 and Kendall brands, as well as other private label brands. It also markets Group II Pure Performance base oils globally, as well as import and market Group III Ultra-S base oils through an agreement with Korea’s S-Oil corporation. It has interests in Sweeny Cogeneration, L.P., which owns a cogeneration power plant located adjace nt to the Sweeny Refinery. The plant generates electricity a! nd provid! es process steam to the refinery, as well as merchant power into the Texas market. The plant has a net electrical output of approximately 440 megawatts and is capable of generating over 3.6 million pounds per hour of process steam.
- [By Ben Levisohn]
During the past three months, Valero Energy (VLO) has fallen 7.3%, Marathon Petroleum (MPC) has dropped 17% and Tesoro (TSO) has plunged 21%. Phillips 66 (PSX) is off 13% during that period, while HollyFrontier (HFC) is down 7.7%.
- [By Todd Shriber, ETF Professor]
Alright, so elevated short interest in a stock not a major factor in CRAK is not a big deal. Applying that logic, it is notable that short interest in Phillips 66 (NYSE: PSX), CRAK's largest holding at a weight of nearly 7.7 percent, remains elevated.
- [By Tyler Crowe]
For refiners, though, that spread in price led to very lucrative refining margins. As that spread has narrowed, so too has margins for refiners.
Refining Margins Q4 2012 Q2 2013 Valero (NYSE: VLO ) $12.27 $9.26 Phillips 66 (NYSE: PSX ) $13.67 $9.88 HollyFrontier (NYSE: HFC ) $24.00 $20.28 CVR Refining (NYSE: CVRR ) $28.08 $20.30
Source: Company Earnings releases
- [By Manikandan Raman]
Barclays has downgraded Phillips 66 (NYSE: PSX) to Equal Weight from Overweight and cut the price target to $86 from $93, citing limited upside in shares.
Best Prefered Stocks To Invest In Right Now: Fortinet, Inc.(FTNT)
Fortinet, Inc. provides cyber security solutions for enterprises, service providers, and government organizations worldwide. The company offers FortiGate physical and virtual appliances products that provide various security and networking functions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, Web filtering, anti-spam, and wide area network acceleration; FortiManager product family to provide a central management solution for FortiGate products comprising software updates, configuration, policy settings, and security updates; and the FortiAnalyzer product family, which provides a single point of network log data collection. It also offers FortiAP secure wireless access points; FortiWeb, a Web application firewall; FortiMail email security; FortiDB database security appliances; FortiClient, an endpoint security software; and FortiSwitch secure switch connectivity product s. In addition, the company provides FortiSandbox advanced threat protection solutions; and FortiDDos and FortiDB database security appliances. Further, it offers security subscription, technical support, training, and professional services. The company was founded in 2000 and is headquartered in Sunnyvale, California.
- [By Lee Jackson]
Deutsche Bank also listed Expedia Inc. (NASDAQ: EXPE), Fortinet Inc. (NASDAQ: FTNT) and Informatica Corp. (NASDAQ: INFA) as the three most controversial stocks. These three literally generated the most hallway, and probably bar-stool, debates at the conference.
Top Construction Material Companies To Own For 2016: SanDisk Corporation(SNDK)
Sandisk Corporation designs, develops, and manufactures NAND flash memory storage solutions that are used in various consumer electronics products. The company offers removable cards under the SanDisk Ultra, SanDisk Extreme, and SanDisk Extreme PRO brands; embedded products under the iNAND brand; universal serial bus (USB) flash drives under the Cruzer brand; digital media players under the Sansa brand; solid state drives under the Lightning brand; and wafers and memory components. Its removable card products are used in a range of consumer electronics devices, including mobile phones, digital cameras, gaming devices, and laptop computers; and embedded flash products are used in mobile phones, tablets, ultrabooks, eReaders, global positioning system devices, gaming systems, imaging devices, and computing platforms. The company also provides high-capacity storage solutions, such as solid-state drives that are used in lieu of hard disk drives. It offers its products to the m obile phone, consumer electronics, and computing end markets through original equipment manufacturers, distributors, and retail sales channels in the Americas, the Asia Pacific, Europe, the Middle East, Africa, and Japan. The company was formerly known as SunDisk Corporation and changed its name to SanDisk Corporation in August 1995. SanDisk Corporation was founded in 1988 and is headquartered in Milpitas, California.
- [By Michael Flannelly]
Early on Friday, analysts at RBC Capital boosted the near-term estimates on SanDisk Corporation (SNDK), a manufacturer of data storage products, because a fire at SK Hynix’s factory should lead to favorable pricing over the next two quarters.
“We see a favorable pricing environment as a result of SK Hynix’s fire, which threatens to curtail NAND output as the company likely re-purposes production back toward DRAM, resulting in lower than expected incremental NAND wafers vs. company’s plan of 170K/WPM,” RBC Capital analyst Freedman said. “Consequently, we see stronger pricing through EoY before SK Hynix ramps NAND toward normalized prod’t levels as DRAM resources are restored/replaced.”
The analysts maintain an “Outperform” rating on SDNK and still see shares reaching $76. This price target suggests a 26% upside to the stock’s Thursday closing price of $60.08. Furthermore, they boosted SanDisk’s 2013 EPS estimates from $4.82 to $4.95.
SanDisk shares were up a fraction during pre-market trading on Friday. The stock is up 38.11% year-to-date.
Best Prefered Stocks To Invest In Right Now: Smith & Nephew SNATS, Inc.(SNN)
Smith & Nephew plc develops, manufactures, markets, and sells medical technology products and services worldwide. The company offers sports medicine joint repair products for surgeons, including an array of instruments, technologies, and implants necessary to perform minimally invasive surgery of the joints; and arthroscopy enabling technologies for healthcare providers, such as fluid management equipment for surgical access, high definition cameras, digital image capture, scopes, light sources, and monitors to assist with visualization inside the joints, radio frequency wands, electromechanical and mechanical blades, and hand instruments for removing damaged tissue. It also provides trauma and extremities products consisting of internal and external devices used in the stabilization of severe fractures and deformity correction procedures; gynecological instrumentation devices; knee implant products for specialized knee replac ement procedures; and hip implant products for reconstruction of the hip joint, as well as various products and technologies to assist in surgical treatment of the ear, nose, and throat. In addition, the company offers advanced wound care products for the treatment of acute and chronic wounds, including leg, diabetic and pressure ulcers, burns, and post-operative wounds; advanced wound devices, including traditional and single-use negative pressure wound therapy and hydrosurgery systems; and biologics and other bioactive technology products for debridement and dermal repair/regeneration. The company primarily serves the providers of medical and surgical treatments and services. Smith & Nephew plc was founded in 1856 and is headquartered in London, the United Kingdom.
- [By Charles Carlson, CEO and Portfolio Manager, Horizon Investment Services]
For investors looking for growth but also income, I especially like three health-care related stocksFresenius Medical (FMS), Novo Nordisk (NVO), and Smith & Nephew (SNN).