FTO - $57.24 - Frontier Oil Corp
We targeted FTO at $56 when it was only a few cents away from a new high at $64. It seemed like an impossibility at the time but fate and a couple of downgrades on price knocked it back to where it was worth buying. I would gladly add additional plays if I could get a -$8 dip individually and not harm the rest of the portfolio.
Friedman Billings, Banc America and Credit Suisse downgraded FTO over the last week. BAC went all the way to a sell saying they had run past their price target of $47. Let's hope everyone is wrong.
FTO is a strong takeover candidate and should be very profitable since they can refine the cheaper heavy crude.
Earnings schedule: Should be late May.
Frontier Oil Corporation (Frontier) is an independent energy company engaged in crude oil refining and wholesale marketing of refined petroleum products. The Company operates refineries (the Refineries) located in Cheyenne, Wyoming, and El Dorado, Kansas, with a total annual average crude oil capacity of 162,000 barrels per day (bpd). Both of the Refineries are complex refineries, capable of processing heavier, less expensive types of crude oil, while producing gasoline, diesel fuel and other high-margin refined products. Frontier purchases crude oil to be refined and markets refined petroleum products, including various grades of gasoline, diesel, jet fuel, asphalt and other by-products. The Company focuses its marketing efforts in the Rocky Mountain region, which includes the states of Colorado, Wyoming, Montana and Utah, and in the Plains States region, which includes the states of Kansas, Oklahoma, Nebraska, Iowa, Missouri, North Dakota and South Dakota.
Breakdown trigger $56.00 hit (4/11)
Position: Oct $60 Call FTO-JL @ $6.50