This oil refiner Best Stock is seeing insider buying and could break out
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — There are a million reasons why an insider might sell their own company’s stock; it’s a large part of their compensation, they need to get liquid for a real estate transaction, paying for a daughter’s wedding, diversifying a portfolio, etc. But there’s only one reason why an insider would buy: They think the stock is undervalued and that it’s going higher. At least, that’s the way I learned it. Back in the day, as a retail broker, we loved pitching stocks to people where the insiders of the company were also buying. It felt like a cheat code. Of course, this was never any sort of guarantee that the trade would work, but it definitely seemed like we were stacking the odds in our favor. I bring this up because there’s been insider buying in a name we mentioned during our Monday blast to you , and we thought we’d shine a brighter spotlight on the company today. Phillips 66 (PSX) is one of the three largest publicly traded refineries in the United States with 13 facilities and a daily refining capacity of over 1.5 million barrels as of Q2 2025. We wrote the stock up on Monday with a “C” letter grade given the sideways action in the chart. This morning, I decided to add the position to my own portfolio (consider this my disclaimer, I am now long PSX). As we mentioned earlier this week, Valero (VLO) and Marathon Petroleum (MPC) have already broken out. Phillips has been the laggard of the group but is starting to set up technically. This potential breakout is happening against the backdrop of fundamental improvement for both the company and its industry as well as a raft of insider buying over the summer. Since May, four different board directors have pulled the trigger on $1.24 million worth of open-market buys. In addition, one of the most successful activist hedge funds in the world is now holding two board seats and has publicly stated they believe the stock should be substantially higher. Sean’s going to fill you in on the details and I will be back with a chart worth looking at. Best stock spotlight: Phillips 66 (PSX) On the list since: Sept. 3, 2025 Sean — Phillips 66 (PSX) is one of the largest U.S. downstream energy companies, operating across a number of energy segments including refining, midstream and chemicals. The company runs a network of refineries with capacity of over 1 million barrels per day, pipelines and storage assets, and a joint venture in chemicals through Chevron Phillips Chemical. PSX is a value-add business, not just a commodity distributor. Its business model is built on turning crude oil into refined products like gasoline, diesel and jet fuel, and then transporting those fuels to end markets — all while capturing margins across the value chain. PSX has performed better than the XLE the past year but has fared much worse than the S & P, with a total return of 5% the past year vs 2% for the XLE and 16% for the S & P 500. YTD the stock has done well up 20%, but not as well as some other energy stocks on the list. Namely, VLO up 40% and MPC up 38% this year, the top 2 performers in the energy sector thus far. Elliott Management, one of the most prominent activist hedge funds in the world, disclosed a multibillion-dollar stake in PSX earlier this year. Elliott Management noted PSX has consistently underperformed its peers due to weak execution, poor governance, and flawed capital allocation. In letters to shareholders, Elliott described a culture of complacency and boardroom deference that rejects new ideas and ignores investor concerns. Elliott’s activist campaign, branded “Streamline 66,” calls for a sharper focus: spinning off or selling midstream assets they believe could be worth $40–60 billion, divesting non-core businesses like European retail and parts of Chevron Phillips Chemical, and simplifying the structure so investors can better recognize value. Elliott thinks that with operational and governance-focused improvements, the stock could trade as high as $200, which is about 46% higher than Wednesday’s close. Elliot has already captured two board seats in Phillips’ most recent proxy vote. PSX trades at a forward 12x earnings which is right at the energy sector’s current median multiple. However, their earnings are expected to be the highest of any energy component next year. According to Finviz, EPS is expected to grow 107% next year (after a 12% decline this year). Granted that growth is coming off a bad year, but that’s nearly 40% higher growth than what is expected to be the second-highest grower, EXE which expects 69% growth next year. According to Quartr, their next earnings report in October is expected to deliver 16% EPS growth year-over-year and 106% EBIT growth year-over-year. This company is improving. This slide comes from their latest report in July. Utilization and product yield are going up while costs are going down. Those are things we like to see. Phillips 66 is a work in progress. As Josh noted on Monday, the chart gets a C for having some sideways chop. But the fundamentals look decent, income is going up and costs are coming down, and there’s an activist pushing management to improve with a $200 price target. All while you get paid a 3.5% dividend to see if that target is hit, not bad! Risk management Josh — This isn’t fancy, but it makes the right point. This summer, we’ve witnessed the snapping of a downtrend and the birth of a new uptrend for PSX, despite the fact that the stock has been trailing its peers so far. Here’s a weekly chart with my own crude crayon scribbles to illustrate what I’m talking about: That yellow downtrend has been broken by sideways action and a new series of higher lows (as represented by the green trendline) is starting to form. In English, this shows how the buyers are coming in faster on each successive dip, not allowing the price to get back to the prior low. It means the stock is under accumulation. Traders can use this very obvious line of support at $120 as a stop, although I’d use weekly closing prices instead of daily to minimize potential whipsaws at that level: $120 is both the 200-day moving average as well as where the stock bottomed in early August. Should we revisit that low and hold it, I would actually add there. It’s a 12 forward PE ratio with a 3.5% dividend yield. I’m comfortable with the risk/reward from these levels. DISCLOSURES: Josh is long shares of PSX as of the time of this writing. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. 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