The Zacks Analyst Blog Highlights: McGraw-Hill Financial, Exxon Mobil, Chevron, ConocoPhillips and Costco Wholesale

Jun 18, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, June 18, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include McGraw-Hill Financial Inc. (NYSE: MHFI-Free Report), Exxon Mobil Corp. (NYSE: XOM-Free Report), Chevron Corp. (NYSE: CVX-Free Report), ConocoPhillips (NYSE: COP-Free Report) and Costco Wholesale Corp (Nasdaq:COST-Free Report).


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Here are highlights from Monday's Analyst Blog:

Crude Supplies Surge as Imports Jump

The U.S. Energy Department's weekly inventory release showed that crude stockpiles went up, as imports jumped and refiners scaled down their utilization rates. The report further revealed that within the 'refined products' category, gasoline stocks rose, while distillate supplies were down from the week-ago level.

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

Analysis of the Data Crude Oil:

The federal government's EIA report revealed that crude inventories jumped by 2.52 million barrels for the week ending Jun 07, 2013, following a decrease of 6.27 million barrels in the previous week.The analysts surveyed by Platts – the energy information arm of

McGraw-Hill Financial Inc.




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) – had expected crude stocks to remain unchanged. A sharp uptick in the level of imports and drop in refinery utilization rates led to the stockpile build-up with the world's biggest oil consumer.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – were down 759,000 barrels from the previous week's level to 49.27 million barrels. Stocks are currently just under the all-time high of 51.86 million barrels reached in Jan.

Following the weekly inventory increase, at 393.81 million barrels, current crude supplies are 2.4% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was up marginally from 25.7 days in the previous week to 25.8 days. In the year-ago period, the supply cover was 25.1 days.

Gasoline: Supplies of gasoline were up for the first time in 3 many weeks, as domestic consumption weakened and imports spiked. This was partially offset by lower production.

The 2.75 million barrels gain – significantly ahead of analysts' projections for a 1 million-barrels increase in supply level – took gasoline stockpiles up to 221.55 million barrels. Following this build, the existing inventory level of the most widely used petroleum product is 9.8% higher than the year-earlier level and is above the top half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) were down 1.16 million barrels last week, contrary to analysts' expectations for a 1.4 million barrels build in inventory level. The decrease in distillate fuel stocks – the first in 3 weeks – could be attributed to stronger demand, lower imports and decline in production.

At 122.11 million barrels, distillate supplies are 1.8% above the year-ago level but are in the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 0.9% from the prior week to 87.5%.

Zacks Rank

A bullish data from the EIA generally acts as a positive catalyst for crude prices and buoy producers, such as

Exxon Mobil Corp.




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Chevron Corp.




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) and





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). With an improvement in the companies' ability to generate positive earnings surprises, they can then move higher from their current Zacks Rank #3 (Hold).

Costco Continues Decent Sales Run

The U.S. economy is still grappling with an uneven recovery, and companies are tussling to survive the downturn. Amid this environment, Costco Wholesale Corp (Nasdaq:COST-Free Report) has nearly succeeded in overcoming the hurdles, keeping an upbeat note and sustaining its sales momentum.

Costco continues to be a dominant retail wholesaler, based on the breadth and quality of merchandise it offers. The company's strategy to sell products at heavily discounted prices has helped it to remain on a positive growth track amid the beleaguered economic conditions, as cash-strapped customers continue to see it as a viable option for low-cost necessities.

Riding on Positive Comps

Costco is well positioned in the warehouse club industry, having delivered positive comparable-store sales consistently so far in 2013.

Costco has consistently registered comparable-store sales growth from January to May. Within this period, comps growth touched a low of 4% and hit a high of 6%, thereby recording an average growth of approximately 4.6%. In the first five months of 2013, comps increased 4% in January, March and April, 6% in February and 5% in May.

Given the current macroeconomic environment, monthly sales data for Costco is also encouraging, reflecting consistent growth. The company, within the span of January to May 2013, registered sales growth in the range of 7%­–8%, reflecting average growth of approximately 7.2%. The company registered sales growth of 7% in January, March, April and May, while registering 8% growth in February.

What Drives Growth

A differentiated product range enables Costco to provide an upscale shopping experience to its members, resulting in market share gains and higher sales per square foot. Moreover, the company continues to maintain a healthy membership renewal rate. Costco also remains committed to open new clubs in domestic and international markets. The company's diversification strategy is a natural hedge against risks that may arise in specific markets.

Costco's Zacks Rank

Costco currently carries a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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