Investors and readers know about the barely-adequate crude oil refining system in the United States.

It's hard to believe, but when the U.S. opens its next refinery, it will be the first new one in more than 20 years. Meanwhile, demand for refined crude products, including gasoline, continues to rise. That's why it makes sense to consider a refining stock or two, such as Valero Energy (NYSE: VLO).

Valero is the largest oil refiner in the United States, but that's not the only compelling dimension to VLO. Valero also boasts what oil analysts call "refining flex." Valero can process large amounts of lower-cost heavy and sour crude -- refining these into cleaner-burning, higher-margin products, including low-sulfur diesel.

Another VLO advantage: Valero has refineries throughout the U.S., in New Jersey, Delaware, Louisiana, Oklahoma, Tennessee, Texas and California, in addition to facilities in Aruba and Canada. The company's overall production capacity is 3.1 million barrels per day. The Reuters F2007/F2008 EPS consensus estimates for VLO are $8.19/$8.16.

The risks? A major U.S. economic slowdown or recession would hurt VLO's results. Further, margins on selected product grades may narrow in 2008, but many grades will still be above historical norms.

The First Call mean rating for VLO is: Buy. [21 firms.] Mean 2008 target: $80.40. [high: $110, low: $51.]

Stock Analysis: Valero is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than one year should be rewarded from VLO's shares. Sell / Stop Loss if you were to purchase shares in this company: $44.