Phillips 66: Wartime Beneficiary Of Surging Diesel And Chemicals Margin (Double Rating Upgrade)

Michael Fitzsimmons23.17K FollowersFollow5ShareSavePlay(22min)CommentsSummaryPhillips 66 (PSX) is upgraded to Strong Buy, benefiting from surging diesel and chemical margins due to the war-on-Iran and Strait of Hormuz closure.PSX's heavy crude refining capacity and recent WRB Refining acquisition position it to capitalize on high diesel prices and discounted Canadian heavy feedstock.Asian chemical supply disruptions are boosting CPChem's U.S. operations, with polypropylene prices up 35% since March, supporting PSX's chemicals recovery.In addition, PSX's NGLs fractionation volumes and LPG exports (1 million bpd and 330,000 bpd, respectively, in Q3FY25) are highly levered to higher oil prices.So, despite a 35% YTD rally, PSX's dividend yield remains attractive, and earnings could reach $15–$25/share depending on war duration, with $200–$250/share price targets plausible. U. J. Alexander/iStock via Getty Images I just returned from a little vacation overseas and thought I'd begin my return into the Seeking Alpha zeitgeist with an article on, you guessed it: an energy company. Meantime, all I'll say about my vacation is that I am sure glad I'm notThis article was written byMichael Fitzsimmons23.17K FollowersFollowMichael Fitzsimmons is a retired electronics engineer and avid investor. He advises investors to construct a well-diversified portfolio built on a core foundation of a high-quality low-cost S&P500 fund. For investors who can tolerate short-term risks, he advises an over-weight position in the technology sector, which he believes is still in the early stages of a long-term secular bull-market. For dividend income, and as a 4th generation oil & gas man, Fitzsimmons suggests investors consider a position in large O&G companies that provide strong dividend income and dividend growth. Fitzsimmons' articles on portfolio management recommend a top-down capital allocation approach that is aligned with each individual investor's personal situation (i.e. age, retired/working, risk tolerance, income, net worth, goals, etc) and might include allocations into investment categories such as the S&P500, technology, dividend income, sector ETFs, growth, speculative growth, gold, and cash.Analyst’s Disclosure: I/we have a beneficial long position in the shares of PSX, CVX. COP, XOM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. I am an electronics engineer, not a CFA. The information and data presented in this article were obtained from company documents and/or sources believed to be reliable, but have not been independently verified. Therefore, the author cannot guarantee their accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for the investment decisions you make.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.