Bought to open HFC
Bought 600 shares of HFC at $24.56. Total cost including commission is $14,743.99, or $24.57/share.
Average Wall Street analyst price target for Holly Frontier is $35, which implies more than 40% upside. It’s easy to see, though, how analysts are getting to that value: HFC currently trades at 2/3 of historical valuation metrics. I won’t stay in this one until it achieves these, though. I am looking to gain 15%-20%. There’s a lot of overhead resistance around $28. If we get there, I’ll likely want to sell.
I would hope that with a bit of market support, HFC can achieve the price target in 6-8 weeks.
I will give this some rope, since the stock is near multi-year lows. But a close below $23 is probably where I’d draw the line.
I see HFC as a severely distressed stock. Since the 4th quarter of 2015, HFC has been cut in half, due to low refining margins. I expect that these margins will not recover substantially, until fuel demand rises. So HFC is really a play on GDP growth and a more confident consumer, who will buy bigger cars and drive more.