Delek US Holdings (DK) Stock Soars on EPA Approvals, Analysts Project Upside
Delek US Holdings, Inc. (DK), an oil and gas refiner, has caught analysts' eyes with its potential for significant growth. The company, which operates four diesel-focused refineries, benefits from midstream and refining tailwinds. Recent EPA approvals have unlocked a substantial cash influx, further boosting DK's prospects.
Analysts at Wolfe Research and Bloomberg Intelligence have projected substantial upside for DK's stock. Partial approvals could add up to 20%, while full approvals might even double the stock price. This optimism is driven by DK's strong balance sheet and multiple underappreciated catalysts.
One such catalyst is DK's majority stake in DKL. Generating over 80% of its EBITDA from third-party operations, DKL could be spun off or sold, potentially unlocking substantial net asset value. Currently, hedge funds like Renaissance Technologies, BlackRock, and Vanguard Group hold shares in Delek US Holdings, Inc.
DK's recent EPA approvals for Renewable Identification Number (RIN) SRE refunds have provided a cash windfall of $600-$900 million. This cash app could be used to fund a $565 million share repurchase program, effectively retiring much of the constrained 60 million share float. As of September 24th, DK's share was trading at $32.72.
Delek US Holdings, Inc. presents a compelling investment opportunity, backed by analysts' projections, a strong balance sheet, and multiple catalysts. The recent EPA approvals have provided a significant cash boost, which could be used to retire a substantial portion of the share float. While not among the 30 Most Popular Stocks Among Hedge Funds, DK's potential is gaining traction, as evidenced by a bullish thesis posted on the Value investing subreddit.
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