Sunoco, Inc. (NYSE: SUN) has underperformed, but I'm nevertheless Reiterating my Buy rating for the shares, first recommended on April 20, 2009 at a price of $26.58. Here's why:Sunoco focuses on refining a relatively high percentage of higher-grade products, but demand has been depressed, due to the recession. Given a likely stabilization in U.S. gasoline demand later in 2009, revenue should rebound, which should send institution investors back into SUN.
Further, Sunoco's strong presence on the lucrative East Coast is another positive, but I've raised the Sell/Stop Loss to guard against any surprises. The stock has remained largely below its 50-day moving average for six months, which is not a good sign. Hence, SUN has to show technical and fundamental improvement, or I'll kick it. The First Call FY2009/FY2010 EPS estimates for SUN are $1.36 to $2.91.
Stock Analysis: Sunoco is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in SUN now. Under any circumstance, don't buy more than 25% of your SUN position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $18.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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