Closing Open Position in Western Refining Inc.
In late December I became convinced that the crude oil refining companies would be the sector to profit from big drop in the prices of crude oil. Western Refining Inc. (NYSE:WNR) is a very well run mid-cap refining company and I added WNR to the 30 Day Dividends recommended positions list near the end of December 2014.
At that time, I conservatively expected WNR to produce a 25% total return over the course of the full year 2015. With an entry price of $37.41, I set a target price of $48, which would be a 28% return plus any dividends earned. The stock market has discovered the refining companies over the last month, pushing share prices up significantly. The WNR share price has been flirting with the $48 level for the past two weeks, moving above that price for less than a trading day before again closing in the $46 to $47 range. Today WNR has again cracked above $48 and I think it is time to take the very nice profit this trade has produced.
While I think the refiners are going to do well for the rest of 2015, I do not have good visibility on further large share price gains. I am certain that market conditions will allow us to again get into WNR or another refiner at a better price sometime later in the year.
Trade recommendation: Sell WNR today March 9, 2015 at as close to $48 per share as possible, representing a 28% gain. I will use the closing price to calculate the recommendation final return results.