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Tickers in this Article: VLO, CLMT, IOC, BPT, WLT, HFC, ARLP
The Nasdaq has risen 0.5%, the S&P 500 is up 0.3% and the Dow has climbed 0.1% on a good day for the market so far. The energy sector is the category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms. Performance in the sector is largely driven by the supply and demand for worldwide energy. Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops. Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil.

The Energy sector (XLE) is up 0.6%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Valero (NYSE:VLO)$16.13 billion+5.3%
Calumet Specialty Products Partners (Nasdaq:CLMT)$1.59 billion+3.4%
InterOil Corporation (NYSE:IOC)$3.81 billion+3.4%
BP Prudhoe Bay (NYSE:BPT)$2.33 billion-3.2%
Walter Energy (NYSE:WLT)$2.22 billion-3.1%
HollyFrontier (NYSE:HFC)$7.94 billion+2.7%
Alliance Resource Partners (Nasdaq:ARLP)$2.39 billion-2.7%
Broker Summary: OptionsXpress Online Trading Platform

Valero (NYSE:VLO) has risen 5.3% to hit a current price of $30.78 per share. The company is currently trading a volume of 9.4 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. VLO has a low debt-equity ratio of 42%. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

Calumet Specialty Products Partners (Nasdaq:CLMT) is currently trading at $28.55 per share, a 3.4% increase. So far today, the company's volume is 317,416 shares, 0.8 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. PEG ratio for CLMT is consistent with the industry average at 0.27. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

Increasing 3.4%, InterOil Corporation (NYSE:IOC) is trading at $81.43 per share. The company's volume is currently 238,266 shares. This is about the same trading activity as there was yesterday. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. A company's investment value can be estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. IOC's P/B ratio of 11.11 shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio

At $105.43, BP Prudhoe Bay (NYSE:BPT) has slipped 3.2%. The company's volume is currently 121,296 shares for the day, consistent with its current three-month average. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. BPT has a high dividend yield of 8.5%. This is good news for income investors as the payout could be high. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Investment Valuation Ratios: Dividend Yield

Walter Energy (NYSE:WLT) has decreased to $34.39 per share, a 3.1% fall. The company's volume for the day so far is one million shares. If a stock price moves on high volume, this means that the change is a significant one. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. WLT's P/E ratio of 9.6 is above the industry average of 4.76. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

HollyFrontier (NYSE:HFC) is up 2.7% to reach a current price of $40.06 per share. So far today, the company's volume is 929,012 shares, consistent with its current daily average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt ratio shows the proportion of assets that a company is financing through debt. HFC has a low debt ratio of 43.2%. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Alliance Resource Partners (Nasdaq:ARLP) is trading at $63.08 per share, down 2.7%. The company is trading at a volume of 51,500 shares. This is greater than yesterday's volume of 41,834 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ARLP's P/S ratio of 1.07 is on the high side. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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