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HollyFrontier Corporation (HFC) Leads Downstream Oil Rally

Downstream oil firm HollyFrontier Corporation (HFC) put up one of the strongest performances in the pre-Thanksgiving trading session on Wednesday, leading a rally in the broader marketing and
Michael Teague is a staff writer for Equities.com. His previous experience includes three years as the associate editor of Los Angeles-based Al Jadid Magazine, a bi-annual review of the arts & culture of the Middle East, where he contributed many articles on the region in the form of features and book & film reviews. His educational background includes a BA in French literature from the University of California, Irvine, where he developed a startling proclivity for anything having to do with the 19th century.
Michael Teague is a staff writer for Equities.com. His previous experience includes three years as the associate editor of Los Angeles-based Al Jadid Magazine, a bi-annual review of the arts & culture of the Middle East, where he contributed many articles on the region in the form of features and book & film reviews. His educational background includes a BA in French literature from the University of California, Irvine, where he developed a startling proclivity for anything having to do with the 19th century.

Downstream oil firm HollyFrontier Corporation (HFC) put up one of the strongest performances in the pre-Thanksgiving trading session on Wednesday, leading a rally in the broader marketing and refining industry.

The previous day, the stock had crossed above its 200-day moving average on above average volume, a welcome event after shares for the company had struggled throughout the first half of the year. But while Hollyfrontier has added just shy of 7 percent year-to-date, the company enjoys a debt-equity ratio far below the industry average at 0.16, while its revenue growth has outpaced the industry average.

Furthermore, the company’s 5 refineries with a combined output of 443,000 barrels per day are expected to drive growth into 2014, given the proximity of the Dallas company’s operations to lucrative Texas plays. Last month, HollyFrontier got an upgrade from analyst firm Howard Weil from “sector perform” to “sector outperform”, a welcome event that coincided with the stock’s rebound off of a double bottom.

The $9 billion company has struggled with earnings and may continue to do so over the coming quarters, as a glut of recently constructed pipelines to the Gulf Coast have significantly impacted margins. There has nevertheless been a palpable bullishness surrounding the stock, and analysts are expecting on average a 5 percent growth in sales in 2014.

Ahead of Wednesday’s closing bell, HollyFrontier was trading over 5 percent higher, to as much as $49.16, putting the stock within $10 of its 52-week high.

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