Selection for this week
Some Pros about the stock
Some Cons about the stock
Quant Rankings
Criteria for choosing
The previous selections

The momentum stocks in the portfolio saw an increase since last Thursday. The stock added last week, NESR (National Energy Services Reunited) , saw an increase of +23% since added. The portfolio continues to steadily diversify away from the initial heavy concentration in IT stocks that made up the initial starting selections.

Add: PSX (Phillips 66) – Oil & Gas Refining & Marketing

What does the company do?

Phillips 66 is an integrated downstream energy company operating in the U.S., U.K., Germany and other international markets. It operates through five segments: Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels.

The company transports and stores crude oil and refined products, processes and markets natural gas and NGLs, produces chemicals and plastics, and refines crude oil into gasoline, diesel and aviation fuel. It also markets refined and specialty products, including lubricants and base oils, while expanding its renewable fuels business and sustainable aviation fuel operations.

Phillips 66 markets products under brands including Phillips 66, Conoco, 76, JET, Kendall and Red Line. Founded in 1875 and headquartered in Houston, Texas, the company has a diversified business model spanning traditional and renewable energy.

Why Some Investors Are Bullish

Exceptional Q2 2026 earnings
Phillips 66 reported $3.85 billion in Q2 net income, compared with $877 million a year earlier. Adjusted EPS was $9.41, well above the $7.68 consensus estimate, helped by exceptionally strong refining margins.

Generally positive analyst sentiment
Analyst coverage remains favorable overall, although there is disagreement among analysts. Recent targets include $235 from Goldman Sachs, Raymond James and UBS, while Barclays maintained a much more conservative $183 target.

Strong earnings outlook
Analysts were forecasting a substantial improvement in 2026 earnings even before the Q2 results. The latest consensus available before earnings projected approximately $22.43 in 2026 EPS, highlighting the magnitude of the expected earnings recovery.

Diversified business model
Phillips 66 operates across Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels, giving it more diversified operations than a pure-play refiner.

Major Western Gateway opportunity
Phillips 66, Kinder Morgan and HF Sinclair have approved the $5 billion Western Gateway Pipeline project. Phillips 66 will own 49.9%, and the approximately 1,300-mile system is expected to transport up to 230,000 barrels per day, with completion targeted for 2029.

What Bears Are Worried About

The stock has already had a major run
PSX shares have risen approximately 75% in 2026, dramatically outperforming the broader energy sector. After such a large gain, expectations are higher and the stock could be vulnerable to a pullback if earnings disappoint.

Refining margins may normalize
The exceptional Q2 results were helped by unusually strong refining margins resulting from disruptions to global crude and fuel supplies. Refining executives remain optimistic, but margins are expected to ease as the year progresses.

Cyclical, commodity-driven business
Despite its diversification, Phillips 66 remains significantly exposed to refining margins, crude prices, fuel demand and geopolitical conditions. A reversal in these favorable conditions could cause earnings and cash flow to decline sharply.

Quant Rankings

P/E Non-GAAP (FWD) B+ 8.76
PEG Non-GAAP (FWD) A+ 0.24
Revenue Growth (YoY) B 14.44%
EPS FWD Long Term Growth (3-5Y CAGR) A+ 35.97%

ROE Growth (YoY) A+ 279%
Return on Common Equity (TTM) A- 24%
3M Price Performance A+ 28%
FY1 Up Revisions (last 90 days) 15 with 0 Down

Dividend Safety A-

Div Yield (FWD) 2.25%

My View

I see Phillips 66 as a much stronger company than it was previously, with exceptional Q2 earnings, a diversified business and significant long-term infrastructure opportunities. However, after the stock’s substantial rally, I would be cautious about assuming that Q2’s unusually strong refining margins will continue at the same level. For me, the key question is whether Phillips 66 can convert today’s exceptional refining environment into sustainable earnings and cash flow over the longer term.

Top Quant Stock of the Week Criteria

I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.

I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.

One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.

The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.

All countries are included. ADR’s are ok but Pink Sheet stocks will not be allowed.

Certain Industries are excluded. My testing shows they do not perform well using Quantitative rankings. Two of the main ones are BioTechnology and Pharmacueticals.

The Remove Criteria: Once the stock no longer qualifies to be retained in the Portfolio, it will be removed. This could be because the companies metrics have deteriorated since selection, it is involved in a buyout or financial reporting problems.

Once a stock has been added to the Active list, it will not be added to. No doubling down.

The stocks considered are larger small cap, mid cap, large cap and Mega cap. They will be fairly easy to trade with opening or closing market orders as one of the ways to enter and exit positions.

It should be expected that about 50 stocks will be Active in the Portfolio in any given week, once it gets to the two year mark.

All stocks are added as equal weight. No rebalancing is to occur.

To be considered for addition, the stock has to be in the top group of Quant rankings for just several weeks. This is to allow newly upgraded stocks to qualify quickly. Hopefully, this will catch a couple of strong momentum stocks early in their move.

Once a stock is removed for cause, it can be added back in once it meets the add criteria. No waiting period is required.

There will be no limits on percentages of stocks in the Portfolio by Sector or Industry.

Previous Selections:

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated. Disclaimer