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  (David J. Phillip/Associated Press)


(David J. Phillip/Associated Press)

Research Report

What the Benjamin Graham model likes about this oil refiner Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

Shares of Texas-based oil refiner HollyFrontier Corp. struggled over much of 2013 amid shrinking margins and economic and geopolitical concerns. But the company has taken in more than $20-billion (U.S.) in sales over the past 12 months and several strategies think it was hit too hard. The company's market cap is $9.7-billion.

HollyFrontier trades for just 0.47 times sales and has a reasonable debt/equity ratio and $3.25 in free cash per share, all part of why it gets strong interest from the Kenneth Fisher-based model.

It has a 2.33 current ratio and just $1-billion in long term debt vs. $2.5-billion in net current assets, showing the financial strength that the Benjamin Graham model likes to see.

The company trades for just 9.3 times earnings and 1.58 times book value, two more reasons the Graham model has strong interest

It has retained (not paid out as dividends) $22.33 in per share earnings over the past decade, during which time EPS have risen $8.02. That makes for a stellar 35.9-per-cent return on retained earnings, which the Warren Buffett-based model likes.

HollyFrontier has an 18-per-cent return on equity. It has a 22.6-per-cent earnings yield (EBIT/enterprise value), which the Joel Greenblatt-based model considers very strong and it has a 30.9-per-cent return on capital, which also helps it get some interest from the Greenblatt model.

John Reese is long HFC.

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