Stock Pick

  • The Energy Transition Is an Oil Refinery Making Renewable Diesel

    The Energy Transition Is an Oil Refinery Making Renewable Diesel(Bloomberg) — In a sign of changing times, a U.S. oil refining company is converting one of its plants into a producer of clean fuel.HollyFrontier Corp.’s Cheyenne refinery will stop using crude oil and be repurposed to pump out renewable diesel, which is typically made from soybean oil, recycled cooking oil and animal fats. That’s after processing margins plummeted on the collapse in fuel demand due to Covid-19-related lockdowns. Besides, the old facility’s maintenance costs were “uncompetitive,” and the government is promoting cleaner fuel production.It’s the latest example of how the traditional fossil fuel industry is changing amid rising calls for the protection of the environment and increased demand for green sources of energy. Cheaper renewable energy projects have already led to decreasing coal output across the U.S., and now — in the wake of oil’s historic crash — some fuel producers are grappling with diminished returns from turning crude into fuel.“Demand for renewable diesel, as well as other lower carbon fuels, is growing and taking market share based on both consumer preferences and support from substantial federal and state government incentive programs,” Mike Jennings, chief executive officer of HollyFrontier, said in a statement Monday.The company expects to spend $125 million to $175 million to re-purpose Cheyenne to produce about 90 million gallons per year of renewable diesel by the first quarter of 2022. The plant will stop consuming crude oil at the end of July this year, and 200 workers will be laid off, according to HollyFrontier.The conversion plan comes as dozens of small refineries nationwide brace for a big spike in costs to comply with the Renewable Fuel Standard, which mandates they blend biofuel into gasoline or buy tradable credits to comply. For years, many small refineries have won exemptions from the mandate, but under a federal appeals court ruling in January, only refineries that have continually been granted waivers can count on getting them in the future.HollyFrontier is effectively shedding the Cheyenne refinery’s biofuel-blending obligation under the RFS and transforming it into a plant that stands to benefit from the program.Using the converted plant, HollyFrontier will be able to produce not just renewable diesel encouraged by the RFS but also compliance credits that can be sold separately. However the transition comes with other costs, as fewer workers will be necessary to run the converted plant. The RFS is effectively forcing the closure of a plant that generated tax revenue and jobs for Wyoming and mandating its replacement be a smaller plant that employs far fewer people to sell fuel to California, said a refining industry official who asked not to be named discussing industry strategy.Senator John Barrasso, a Republican from Wyoming, called the job cuts at the Cheyenne refinery “devastating.” Although the Covid-19 pandemic has hurt oil refineries, Barrasso also pinned blame on the Environmental Protection Agency’s handling of the Renewable Fuel Standard.“EPA has failed to protect small refineries from unreasonable compliance costs under the Renewable Fuel Standard,” Barrasso said in an emailed statement. “Congress mandated the agency protect refineries under the Clean Air Act” and “relief from the RFS is critical to small refineries.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Where to invest $5,000 into ASX 200 shares immediately

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    This afternoon the Reserve Bank will make a decision on the cash rate. While there is speculation that rates could go to zero today, I’m not overly convinced this will be the case.

    However, what I am convinced about, is that rates will remain at ultra low levels for a long time to come.

    In light of this, if I had $5,000 in a savings account and no immediate use for it, I would invest it into the share market.

    Three top ASX 200 shares I would buy right now with these funds are named below:

    Appen Ltd (ASX: APX)

    Appen is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). It has a team of over one million crowd-sourced experts preparing the data for the models of some of the world’s biggest tech companies. This is a vital part of the process and demand for its services is growing very strongly. And given the importance of AI and machine learning for big business, I expect this to be the case for a long time to come. In light of this, I believe Appen is well-placed to deliver strong earnings growth over the next decade.

    Aristocrat Leisure Limited (ASX: ALL)

    The Aristocrat Leisure share price has fallen heavily this year because of the pandemic. While its performance has inevitably been impacted by the crisis, I believe the selloff has been overdone. Especially given how I expect the gaming technology company to bounce back strongly when the crisis passes. This is due to its industry-leading poker machines and its growing digital business. The latter is experiencing very favourable tailwinds right now and is generating material recurring revenues.

    Bravura Solutions Ltd (ASX: BVS)

    Bravura Solutions is a growing financial technology company which offers a range of solutions to the wealth management and funds administration industries. While the company has a number of products in its portfolio, I’m most positive on the Sonata wealth management platform. This next generation wealth management platform has been a key driver of Bravura Solutions’ growth over the last few years. The good news is that I expect more of the same in the future thanks to it sizeable market opportunity.

    And if you have some funds leftover, these five recommendations below look like potential market beaters…

    NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

    Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

    One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

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    James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Where to invest $5,000 into ASX 200 shares immediately appeared first on Motley Fool Australia.

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  • 3 ASX 200 resources shares to buy today

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    There are some great value ASX 200 resources shares to buy right now. The S&P/ASX 200 Index (ASX: XJO) is down 12.94% in 2020 but the Aussie resources sector has so far underperformed the benchmark index. 

    It takes a savvy investor to sniff out value in such a complicated industry. For instance, you have to work out if ASX gold shares are better than iron ore shares. 

    While the Alumina Limited (ASX: AWC) share price is down 33.91% this year, others like Newcrest Mining Limited (ASX: NCM) have climbed higher.

    So, where are the best value Aussie mining shares right now?

    3 ASX 200 resources shares to buy today

    Speaking of Newcrest, I think it could be in the buy zone. The Aussie gold miner’s shares are up 4.11% this year and could be climbing higher.

    Investors are certainly bullish on the ASX 200 resources share. I’m not a big gold investor myself but Newcrest is certainly outperforming. If global gold prices remain high, the Newcrest share price could be one to watch.

    But it’s not the only ASX gold miner that’s potentially in the buy zone right now. I think St Barbara Ltd (ASX: SBM) is worth watching this year. The Aussie gold miner’s shares have surged 17.75% in 2020 thanks to high commodity prices.

    I also think some of the large ASX miners could be undervalued. 

    BHP Group Ltd (ASX: BHP) is one that I’ve got my eye on. BHP shares have been making a steady recovery in recent weeks but are still down by 8.79% in 2020.

    If we see iron ore prices continue to climb, BHP could be a bargain at $35.71 per share. The Aussie miner is far from a safe bet, but it does boast a $169.1 billion market capitalisation.

    Foolish takeaway

    There are a number of ASX 200 resources shares that could be undervalued in 2020. I think buying into the sector is a speculative play, but could be a valuable addition to a well-diversified portfolio.

    For more long-term buying options, check out these 5 ASX shares today!

    NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

    Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

    One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

    Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%…

    Plus 3 more cheap bets that could position you to profit over the next 12 months!

    See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

    CLICK HERE FOR YOUR FREE REPORT!

    More reading

    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post 3 ASX 200 resources shares to buy today appeared first on Motley Fool Australia.

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