The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: NOW who wrote (70229)	9/24/2006 9:56:34 PM
From: Wyätt Gwyön	Read Replies (2) of 110194

fundamentals. i think VLO is worth $150. say a 15x multiple on normalized earnings of $10 for the premier North American refiner. instead it has a PE under 5. that is OK--they are buying back massive amounts of stock so the low prices are a blessing for everybody that doesn't need to sell now. VLO did a great job buying old refineries from clueless integrateds--they paid ten cents on the dollar in some cases. they made big investments in sour refining capacity just before spreads exploded. they had the quickest recovery from Katrina. they had one refinery back up and running in a week. a BP refinery across the street was down for 6 months. they have a loyal workforce--they are ranked like the No. 3 best company to work for according to Fortune. this is a great mgmt team in my opinion. mgmt and i think they should trade at a premium to other refiners, but they've traded at a discount for years. still, the stock has risen explosively as earnings have grown. also, as a general principle, i tend to think it's better to buy companies at lower prices -g-.

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