Two of our previous recommendations are in such good position to benefit from the post-Covid economy, that I’m recommending them again, reports international investing expert Jim Powell, editor of Global Changes & Opportunities Report.
Oil prices are continuing to rise — and so is the outlook for the petroleum industry. One energy sector often overlooked by investors is refineries.
Although refiners do not produce the oil they process, their profits increase when oil prices rise – as they have been doing for several months. That’s because refiners take a percentage of the value of the products they produce.
With Covid-19 cases on the decline, I think US refiners will do especially well as increasing travel boosts the demand for gasoline, diesel, and jet fuel. Judging from the growing number of vehicles on our highways — and increased airline bookings — the travel rebound is already starting.
I think the upcoming vacation season will supercharge the Covid-19 travel recovery. Business reopenings should further increase the demand for fuel as our trucking and delivery companies bounce back from the Covid-19 recession.
In my opinion, Valero Energy Corp. (VLO) is America’s most promising refinery investment. The company is the largest independent refiner in the country – and also does business in Canada, the UK, and Ireland.
Valero Energy, 1-Year
From its 15 refineries, Valero produces gasoline, diesel, jet fuels, asphalts, petrochemicals, lubricants, and other petroleum products. Valero also operates 14 distilleries that produce ethanol for blended gasoline that many states require for use in passenger cars and trucks to reduce air pollution.
In addition to marketing its products to others, Valero sells them directly to the public through its Diamond Shamrock, Shamrock, Ultramar, and Texaco filling stations.
Direct sales, of course, eliminates middle men and helps maximize profits. I think this efficient, well-managed refiner will be a very profitable long-term investment.
Another company that should see its profits increase as the post-Covid-19 economy gains strength is Vulcan Materials (VMC). The company is America's largest supplier of sand, crushed rock, asphalt, concrete, and other unexciting — but essential — construction materials that are used in large quantities.
Vulcan Materials, 1-Year
During the long Covid-19 recession and lockdown, countless construction projects were postponed. Now most of those projects are being rescheduled. The result should be several years of new orders for Vulcan’s products.
The outlook for Vulcan is even better than it may first appear due to the need to rebuild and expand much of America’s infrastructure. The work is expected to take at least a decade — and probably longer. I think VMC is a long-term slam dunk that deserves a place in most long-term portfolios.
