As of January 15, 2016, refining companies Delek US Holdings (DK) and Alon USA Energy (ALJ) were trading 31% and 27.5%, respectively, below their 100-day moving averages. Delek has been in a continuous downtrend since July 2015 after it hit its 2015 highs. The stock formed a double top pattern in July and fell since then.
In the past six months, Delek’s stock struggled to cross its 100-day moving average. On the other hand, Alon moved in a narrow range of $16–$18 since October 2015. After the Fed’s decision to hike the federal funds interest rate in mid-December 2015, Alon’s stock started to fall to $12, where it stood as of January 15. HollyFrontier (HFC) is also trading below its 100-day moving average.
Meanwhile, Phillips 66 (PSX) and Marathon Petroleum (MPC) were trading 6% and 17.5% below their respective 100-day moving averages as of January 15. Also, Valero Energy (VLO) and Tesoro (TSO) were trading at par and 11% below, respectively, their 100-day moving averages.
In comparison, the Energy Select Sector SPDR Fund (XLE) was trading 15.33% below its 100-day moving average. The above table shows these downstream companies’ moving averages and forward target prices.
Wall Street analysts’ consensus estimates
Wall Street analysts’ consensus estimates suggest that the ten major large-cap refiners might return 37.4% on average over the next 12 months. Frontline refineries Phillips 66, Valero Energy, Marathon Petroleum, and Tesoro could rise by 24%, 22%, 60%, and 34%, respectively, from their current levels.
In comparison, Delek, Alon, and CVR Refining could rise by 78%, 44%, and 25%, respectively, from their current levels. In terms of the current and forward PE (price-to-earnings) ratios, Delek, CVR Refining, and HollyFrontier are relatively cheaper than other downstream companies.
In the next part of this series, we’ll analyze midstream companies’ moving averages.