During the recent trading sessions stock of Valero Energy Corporation (NYSE:VLO) was gathering the crowd in the stock market. Many analysts use price trends and patterns to predict future performance, and we can glean some important insights about VLO by examining the chart.
How has the stock performed recently?
Valero Energy Corporation (NYSE:VLO) in the last month has increased +5.99%. Shares are now up +28.17% over the past year, outperforming the broad market by 62.55% and outperformed a peer group of similar companies by 33%. After the latest session, which saw the stock close at a price of $69.94, VLO sits -2.04% below its 52-week high. Valero Energy Corporation (NYSE:VLO) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that VLO may be headed in the future. If we want to get a sense of VLO’s future performance, we have to look at the speed and size of these price movements. Using what are known as momentum indicators, we can use the stock’s price momentum to get a sense of whether the stock is in the midst of, or nearing the end of, a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for VLO is 58.56%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 90.96%, tells a different story, and suggests that VLO currently trades in overbought territory.
What do the trading volumes reveal?
Volume patterns can also be useful for predicting future performance. When trading activity is abnormally high, it’s often a sign that the market feels particularly strong in one way or another about the future direction of a stock. Valero Energy Corporation (VLO) average trading volume of 3,830,825 during the past month is 10.97% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
VLO is currently undervalued by -3.45% relative to the average 1-year price target of $72.44 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.30, which implies that analysts are generally neutral in their outlook for VLO over the next year.
How risky is the stock?
Absolute price performance isn’t the only thing analysts consider when predicting future performance: volatility matters as well. Beta, which measures the stock’s volatility relative to the overall market, is a simple but effective metric for assessing risk.
Valero Energy Corporation (NYSE:VLO) has a beta of 1.20, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. VLO therefore has a above average level of market risk. During the past couple of weeks, VLO average daily volatility was 15.79%, which is 1.86 percentage points lower than the average volatility over the past 100 days.