Tuesday's IBD 50 Stocks To Watch pick — oil refinery leader PBF Energy — is one of the top stocks to buy and watch, as it holds above a recent buy point. Now, the pattern shows a second-chance entry, holding tight following the October breakout. PBF shares rallied nearly 4% midday Tuesday.
Stocks To Buy And Watch: PBF Energy
PBF Energy is the U.S.' sixth-largest refiner of oil products, producing gasoline, heating oil, jet fuel and lubricants.
It beat third-quarter earnings and sales expectations in late October, posting a profit of $7.96 per share on revenue of $12.7 billion. Strong demand for fuel and refined products boosted top and bottom-line demand.
"As we head into the winter months, global product inventories remain low, consumer demand is resilient and refineries are running at high utilization to keep pace," Chief Executive Tom Nimbley said in the earnings release.
The company just restarted its quarterly dividend at 20 cents per share, currently yielding 1.74%.
PBF's IBD Stock Ratings
PBF Energy sales have averaged 89% growth over the last three quarters.
This stock to buy and watch shows a modest 80 Earnings Per Share Rating and a neutral SMR Rating of "C", according to IBD Stock Checkup. It also boasts a solid 96 out of a perfect 99 IBD Composite Rating, despite the weaker EPS Rating.
The pandemic generated losses in 2020 and 2021, pressuring its EPS Rating. However, the refiner is expected to earn a whopping $24.63 per share in 2022.
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PBF Stock In Buy Range
PBF stock broke out in late October and is trading just out of buy range, past a choppy base's 44.22 buy point, according to IBD MarketSmith pattern recognition. The 5% buy zone goes up to 46.43. Now, shares have created a second-chance entry at 49.10, carving a bullish three-weeks-tight pattern.
This pattern is best used as an opportunity to add to an existing position. So, if you want to start a new position, try to buy fewer shares than normal to offset the extra risk.
The relative strength line hit a new high in recent weeks, confirming the energy stock as a market leader. A strong RS line during and after a breakout move is a key technical indicator of strength.
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