A critical analysis of Tesoro’s stock market performance



How is Tesoro doing?

Now that we’ve familiarized ourselves with Tesoro Corporation (TSO), let’s find out how the company has been doing in the stock market.

Investors should note that crude oil is down well over 30% year-to-date, the time frame for our analysis of Tesoro’s stock market performance.

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From the chart above, it should be immediately clear why Tesoro Corporation (TSO) is our candidate for analysis. The stock is a clear outlier with a stellar ~30% total return year-to-date. Total returns include all sources of returns to shareholders, including dividends.

The United States Oil Fund LP (USO), an exchange-traded fund (or ETF) that tracks crude oil, is down ~30% in the same time frame.

On a worse note, the Standard & Poors depositary receipt (or SPDR) S&P Oil & Gas Exploration & Production ETF (XOP), which heavily held small oil and gas exploration and production companies until recently, is down ~35%.

The more diversified Energy Select Sector SPDR ETF (XLE) fared far better with a barely 10% loss during the same period. The fund’s top holdings are integrated companies such as Exxon Mobil (XOM) and Chevron Corporation (CVX).

The power of diversification

The even more diversified SPDR S&P 500 ETF Trust (SPY) is actually the best performing ETF in the pack with a ~15% return year-to-date. The fund tracks the S&P 500 Index, which in turn represents the broad American economy.

Finding outperforming individual stocks such as Tesoro Corporation (TSO) can be very difficult, and investing in individual stocks is frequently risky. The SPDR S&P 500 ETF Trust (SPY)  is a perfect example of the benefits of diversification. It has done well even as energy prices and energy stocks have slumped.

Now that we’ve seen how well Tesoro has performed on the stock market, let’s try to find out the reason behind this performance, particularly since its peers in the energy sector have not been able to do the same.


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