NYSE: PSX refers to shares of Phillips 66 – an American manufacturing and logistics company. The shares have taken a beating due to the volatile situation this year. Being a refinery, the demand for refines products was largely affected due to the outbreak of the pandemic. This, in turn, led the stock to decrease more than 60%. Losses have only partly been recovered. This has confused investors whether oil stocks would be a good buy or not.
The oil-stock: Who is it for?
Many people, especially beginners, wonder whether they should venture into oil stocks. Interested buyers must be aware that this is a volatile sector. It is recommended to venture into this if you feel confident about handling the sector’s volatile nature. While this turns away some people from oil stocks, there are other buying these as well. This could be because, in the past, oil stocks like NYSE: PSX at https://www.webull.com/quote/nyse-psx had generated cash even when the market looked bleak. During weak market conditions, Philipps 66 is also known to make the right moves to save capital.
Yet another reason why investors may gravitate towards this stock could be its growth-focused investments. In a way, this helps in having a steady cash flow, which is rewarding for investors.
Volatility during a pandemic
The refining industry is probably one of the worst-hit due to the global pandemic. All means of transportation were curbed due to lockdowns across the world. This is reflected in the stock value as well. As countries are cautiously lifting restrictions on movement, stocks may regain some lost ground. However, analysts say that the volatility factor is still relevant as air travel would still require a long period to reach the level before the pandemic.
Oil stocks when volatility is high
Even in times of uncertainty, investors/buyers can have hope if the company exhibits adaptability. For instance, Phillips 66 made quick changes so that its finances would not deteriorate due to a sudden drop in demand. Capital spending was reduced, several pending projects were brought to a halt, and the share like NYSE: AUY at https://www.webull.com/quote/nyse-auy repurchase program was suspended. The impact of delaying projects can only be seen after normal situation resumes.
Therefore, the trick to look for companies in the refining sector that have demonstrated the ability to adapt to situations so that losses can be minimized quickly. In a situation such as a global pandemic, the lossesare inevitable. But using smart financial moves, the losses can be controlled to some extent. If a company can achieve that, then the stocks may automatically pick up on their own. Lastly, pandemic or not, the fact remains that volatility is common in this sector. Thus, proceed with caution.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.