HollyFrontier (HFC) 2012 Review

HollyFrontier Corp, which is the result of a merger of Holly Corp and Frontier Oil in July 2011, is one of the largest independent petroleum refiners in the US producing gasoline, diesel, jet fuel, asphalt and specialty lubricant products.  Consolidated historical figures are not yet available; however, earnings per share are expected to grow from $6.42 in 2011 to $6.60 in 2012 while the dividend per share should increase from $.33 to $.50.  Return on equity in 2012 will be roughly 25%.  HFC should benefit from:

(1) economies of scale from its expanded infrastructure,

(2) margins are benefiting from heavy crude differentials as well as price differences between inland and coastal crude,

(3) stock buybacks.

            The major negative is lack of volume growth.

HFC is rated B++ by Value Line, has a 24% debt to equity ratio and its stock yields 1.5%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2002

HFC           1.5%          17%              9%               NA*

Ind Ave      3.7              6                  31                 NA 

                Debt/                        EPS Down       Net        Value Line

                Equity        ROE      Since 2002      Margin       Rating

HFC          24%           21%            NA*             6             B++

Ind Ave     13              17                NA              7            NA

• historical numbers not available

     Chart

            Note: HFC stock made great progress off its November 2008 low, quickly surpassing the downtrend off its July 2007 high (red line) and the November 2008 trading high (green line).  Long term the stock is in an uptrend (straight blue lines).  Intermediate term it is in an uptrend (purple lines).  Short term it is in an uptrend (brown line).  The wiggly blue line is on balance volume.  The Aggressive Growth Portfolio owns a 50% position in HFC. The upper boundary of its Buy Value Range is $19; the lower boundary of its Sell Half Range is $54.

http://finance.yahoo.com/q?s=HFC

11/12