Valero Energy Corporation : The bullish trend is not over
Entry price | Target | Stop-loss | Potential |
---|
$71.14 |
$78 |
$70.9 |
+9.64% |
---|
The US company Valero Energy, engaged in fuels's transportation and petrochemical products, operates in an upward trend with an increase of 44% since the beginning of the year. Several arguments are in favor of a continuation of this trend, the consensus remains positive with an average target price of USD 78.3 (2007 highest).
Despite low crude oil prices, the company has strong fundamentals. First observation concerning the valuation, with an enterprise value estimated at 0.42x its sales. In addition, the Thomson Reuters's consensus has revised upward forecasts of earnings per share for the current year, due to a marked increase at USD 8.64 (+ 21%).
Technically, the share is well oriented on different time scales, supported by its moving averages. The increase will not be challenged as long as the prices move beyond the USD 65.7 short-term support.
In view of all these factors, it seems appropriate to open a long trade above the USD 72 resistance. The first objective will be the upper limit of the upward channel at USD 74. Its breakout could offer a bullish acceleration towards the historical USD 78 resistance. A stop loss will be placed below USD 71, once the trade is open.
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