Monday's IBD 50 Stocks To Watch pick — energy leader Phillips 66 (PSX) — is one of the top stocks to buy and watch following Friday's breakout move. Shares climbed more than 1% Monday morning and are in the 5% buy range past their latest buy point.
XHouston-based Phillips 66 refines, stores, transports and markets fuel and related products.
In the most recent quarter, reported on Nov. 1, the company's earnings and sales soared 103% and 55%, respectively, vs. the year-ago period.
"Our third-quarter results reflect the continued favorable market environment and our strong operating performance. We ran at high rates during the summer driving season to meet peak demand for critical transportation fuel," said CEO Mark Lashier in the Q3 earnings call.
"Our Refining business delivered improved market capture this quarter ...," he added.
Phillips 66 pays out a 3.4% annualized dividend yield, well above the S&P 500's 1.6% average. The energy giant has made this quarterly payout a top priority, increasing it every year since 2012.
Meanwhile, oil prices are generally holding around $90 a barrel. Last week, West Texas Intermediate futures hit a recent peak above $93 a barrel, but are now trading just below $88 a barrel.
PSX's IBD Stock Ratings
PSX stock shows a modest 79 Earnings Per Share Rating and a solid SMR Rating of B, according to IBD Stock Checkup.
Phillips 66 grew earnings by an average 377% over the last three quarters, while sales grew a strong 66% average over the period. But the company lost money in 2020, which has diminished its EPS Rating. In 2021, pretax margins and return on equity measured 3% and 13%, respectively.
This stock to buy and watch shows a perfect 99 IBD Composite Rating, despite a weaker EPS Rating.
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PSX Stock In Buy Range
PSX stock is breaking out past a cup-with-handle base's 110.08 buy point, according to IBD MarketSmith pattern recognition. Shares broke out Friday and were extending those gains midday Monday. The stock is still in the 5% buy zone, which goes up to 115.58.
The relative strength line hit a new high Monday, confirming the energy stock as a market leader. A strong RS line during the early stages of a market uptrend is a key technical indicator of strength. Energy stocks were broadly higher Monday.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
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