Valero Energy Corporation is trading in a bullish trend and several arguments are in favor of the continuation of this trend.

The company’s fundamentals are still strong. Despite the decrease in sales, the group is still able to increase its profitability. Thus, net margin is expected to rise of 50% until 2015. Moreover, analysts from Thomson Reuters have revised largely upward their EPS estimates for the coming years. The company also has a sound financial situation that was largely improved compared to 2009. In fact, leverage as been reduced from 4 to 0.39 last year and this trend should continue. Furthermore, the company seems undervalued taking into accounts both its P/E and EV/Sales ratio, respectively at 8.87x and 0.26x 2014 estimates.

Technically, the security is in a long term uptrend and it is supported by moving averages on all time scales. Nothing seems to stop this bullish trend as the equity broke another resistance level recently. This trend should allow the stock to reach its USD 62 rapidly.

According to both technical and fundamental elements, it seems opportune to take a long position at the current price. The bullish trend should allow the security to reach the USD 62. If the stock crosses it, a new target price will be set. A stop loss will be placed under the USD 57.