3 Reasons to Invest in Phillips 66
Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Phillips 66 (NYSE: PSX) is a stock you want in your portfolio.
The company announced positive second quarter earnings and 0.20 per share dividend in July. Second quarter earnings rose 13% on higher fuel margins. Net income rose in the second quarter to $1.18 billion. And the company has an operating cash flow of $1.4 billion.
The company is doing great as a stock. So why haven't you invested yet?
Here are three good reasons to get behind Phillips 66.
Largest Independent Refiner
It is the largest independent U.S. refiner. Independent refiners process crude. They do not produce oil or explore for natural gas. That is now the work of ConocoPhillips (NYSE: COP), with whom the company keeps a very close relationship. As a result, they are not held back by losses in natural gas exploration that other companies may experience.
Refining and Manufacturing second quarter earnings were $1.2 billion, compared with $774 million a year ago. Refining contributed $882 million in the quarter; while Marketing, Specialties, and Other generated $302 million. R&M adjusted earnings totaled $1,185 million, an increase of $437 million from the same period last year. Refining adjusted earnings were $851 million in the second quarter, an improvement from $498 million during the second quarter of 2011.
This is evidence enough that the company is doing fine on its own as strictly a refining company. Phillips 66 has stakes in 15 operating refineries as well as a chemical joint venture with Chevron Corp (NYSE: CVX) and a pipeline unit with Spectra Energy Corp.
The company believes in itself, as seen by its large repurchase plan. Phillips 66’s Board of Directors has approved the repurchase of up to $1.0 billion of its outstanding common shares.
“We’re off to a solid start, running well in a positive margin environment,” said Greg Garland, chairman and chief executive officer. “The location of our domestic refining, midstream and chemicals facilities enabled us to access advantaged feedstocks, creating strong earnings and cash flow. The announcement of our share repurchase plan is evidence of our commitment to strong and growing shareholder distributions.”
And last but not least, Warren Buffett has taken a $1 billion position in the company. Do you think you know more about investing than the Oracle himself?
ErinAnnie has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.