Valero does what's Best for Shareholders

Valero Energy Corporation (NYSE:VLO) is making the difficult decisions that in the end are best for shareholders.  Today they announced plans to close one of their refineries and let go of 700 employees yet the stock only moved down less than 1% from its 200-day moving average.  Could this be a buying opportunity for investors waiting in the wings?

Oil prices, oil companies and refineries are anything but the rage -- for once the tide has turned against the giant oil companies.  In 2009 Valero shares have lost 12% and in the last 52 weeks the stock is down 43%. Valero had no choice but the close the Aruba refinery which had processed about 275,000 barrels a day.

Unfortunately, the difference in light crude price and that of sour crude has not increased and the product margins remain low, making the operation of this refinery unprofitable," Valero said in its Wednesday statement.

Bill Klesse, Valero's board chairman and CEO, said "when the global economy improves, we expect that product demand, sour crude oil production, and refining margins will also improve."

Today was yet another body blow to everything oil as new government data showed that U.S. crude supplies increased last week, a sign that demand remains weak. Motorists are still enjoying gasoline that is closer to prices from 2005 than what they were paying last summer.

ONE MAN'S TRASH IS ANOTHER MAN'S TREASURE
During the past month, the number of VLO shares sold short jumped 42% to 22.6 million. This accumulation of bearish bets accounts for more than 4% of the company's total float. How long do you think Valero shares will continue to fall, could it be that this company will hit a new 52-week low?

Get real, oil and gasoline still run the world we live in today, at least for the next 10 years.  Let everyone bring the hate on Valero, I would love the opportunity to buy shares in the $13 range, do you really think this stock will stay down forever?

Valero's decision to shut down the Aruba refinery is what you want to see as a potential investor or current shareholder -- control costs.  Believe me America, I would love it if gas and oil would stay at current prices, even get cheaper.  But that's not realistic and being early to the party by purchasing VLO shares on weakness and overall trader hate is something I am seriously considering.  Again, how cheap will shares go?  

Just think of how great the return could be one year from today, this time last year VLO shares were at $31, today they closed at $19. 

You tell me, is Valero Trash or Treasure?

Valero Shares 101

Disclaimer: No positions in any of the securities mentioned in this publication.