Valero Energy Corporation (NYSE:VLO) reached a record high on January 8. Investors identified the company as a major potential beneficiary if cheaper Venezuelan oil enters U.S. markets.
Valero is the largest refiner on the Gulf Coast. Its refineries are historically designed to process heavier crudes, like those from Venezuela. According to Barclays analyst Theresa Chen, the company has the capacity to process an additional 300,000 to 400,000 barrels per day. Valero has already been purchasing some Venezuelan oil from Chevron.
On January 5, investor Michael Burry mentioned Valero in a Substack blog post. "Realize that many Gulf Coast refineries were purpose-built for Venezuelan heavy crude," Burry wrote. "So they have been running with suboptimal feedstock for years. This will, in time, produce better margins across jet fuel, asphalt, and diesel ... I have owned Valero since 2020, and I am more resolved to holding it even longer after this weekend."
On January 9, Mizuho analyst Nitin Kumar raised the firm's price target on Valero stock from $192 to $197. Kumar expects a strong fourth-quarter report. Mizuho maintained its 'Neutral' rating on the stock.
Following the recent rally, Valero's share price has increased by nearly 35% over the past year. The company is included in a list of high-yield crude oil stocks to consider.