(This is The Best Stocks within the Market , dropped at you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — There are 1,000,000 explanation why an insider may promote their very own firm’s inventory; it is a big a part of their compensation, they should get liquid for an actual property transaction, paying for a daughter’s wedding ceremony, diversifying a portfolio, and so forth. But there’s just one motive why an insider would purchase: They suppose the inventory is undervalued and that it is going greater. At least, that is the way in which I discovered it. Back within the day, as a retail dealer, we liked pitching shares to individuals the place the insiders of the corporate had been additionally buying. It felt like a cheat code. Of course, this was by no means any kind of assure that the commerce would work, but it surely positively appeared like we had been stacking the percentages in our favor. I deliver this up as a result of there’s been insider buying in a reputation we talked about throughout our Monday blast to you , and we thought we might shine a brighter highlight on the corporate right now. Phillips 66 (PSX) is one of many three largest publicly traded refineries within the United States with 13 amenities and a each day refining capability of over 1.5 million barrels as of Q2 2025. We wrote the refill on Monday with a “C” letter grade given the sideways motion within the chart. This morning, I made a decision so as to add the place to my very own portfolio (contemplate this my disclaimer, I’m now lengthy PSX). As we talked about earlier this week, Valero (VLO) and Marathon Petroleum (MPC) have already damaged out. Phillips has been the laggard of the group however is beginning to arrange technically. This potential breakout is occurring towards the backdrop of basic enchancment for each the corporate and its trade in addition to a raft of insider buying over the summer time. Since May, 4 totally different board administrators have pulled the set off on $1.24 million price of open-market buys. In addition, some of the profitable activist hedge funds on the earth is now holding two board seats and has publicly said they consider the inventory ought to be considerably greater. Sean’s going to fill you in on the small print and I will likely be again with a chart price taking a look at. Best inventory highlight: Phillips 66 (PSX) On the checklist since: Sept. 3, 2025 Sean — Phillips 66 (PSX) is one of many largest U.S. downstream vitality firms, working throughout quite a lot of vitality segments together with refining, midstream and chemical compounds. The firm runs a community of refineries with capability of over 1 million barrels per day, pipelines and storage belongings, and a three way partnership in chemical compounds by means of Chevron Phillips Chemical. PSX is a value-add enterprise, not only a commodity distributor. Its enterprise mannequin is constructed on turning crude oil into refined merchandise like gasoline, diesel and jet gasoline, and then transporting these fuels to finish markets — all whereas capturing margins throughout the worth chain. PSX has carried out higher than the XLE the previous 12 months however has fared a lot worse than the S & P, with a complete return of 5% the previous 12 months vs 2% for the XLE and 16% for the S & P 500. YTD the inventory has achieved properly up 20%, however not in addition to another vitality shares on the checklist. Namely, VLO up 40% and MPC up 38% this 12 months, the highest 2 performers within the vitality sector to this point. Elliott Management, some of the distinguished activist hedge funds on the earth, disclosed a multibillion-dollar stake in PSX earlier this 12 months. Elliott Management famous PSX has persistently underperformed its friends because of weak execution, poor governance, and flawed capital allocation. In letters to shareholders, Elliott described a tradition of complacency and boardroom deference that rejects new concepts and ignores investor issues. Elliott’s activist marketing campaign, branded “Streamline 66,” requires a sharper focus: spinning off or promoting midstream belongings they consider could be price $40–60 billion, divesting non-core companies like European retail and components of Chevron Phillips Chemical, and simplifying the construction so traders can higher acknowledge worth. Elliott thinks that with operational and governance-focused enhancements, the inventory could commerce as excessive as $200, which is about 46% greater than Wednesday’s shut. Elliot has already captured two board seats in Phillips’ most up-to-date proxy vote. PSX trades at a ahead 12x earnings which is proper on the vitality sector’s present median a number of. However, their earnings are anticipated to be the very best of any vitality part subsequent 12 months. According to Finviz, EPS is anticipated to develop 107% subsequent 12 months (after a 12% decline this 12 months). Granted that development is coming off a foul 12 months, however that is practically 40% greater development than what is anticipated to be the second-highest grower, EXE which expects 69% development subsequent 12 months. According to Quartr, their subsequent earnings report in October is anticipated to ship 16% EPS development year-over-year and 106% EBIT development year-over-year. This firm is bettering. This slide comes from their newest report in July. Utilization and product yield are going up whereas prices are happening. Those are issues we prefer to see. Phillips 66 is a piece in progress. As Josh famous on Monday, the chart will get a C for having some sideways chop. But the basics look first rate, earnings is going up and prices are coming down, and there’s an activist pushing administration to enhance with a $200 worth goal. All whilst you receives a commission a 3.5% dividend to see if that concentrate on is hit, not unhealthy! Risk administration Josh — This is not fancy, but it surely makes the fitting level. This summer time, we have witnessed the snapping of a downtrend and the start of a brand new uptrend for PSX, even if the inventory has been trailing its friends to date. Here’s a weekly chart with my very own crude crayon scribbles as an example what I’m speaking about: That yellow downtrend has been damaged by sideways motion and a brand new collection of upper lows (as represented by the inexperienced trendline) is beginning to type. In English, this exhibits how the patrons are coming in quicker on every successive dip, not permitting the worth to get again to the prior low. It means the inventory is underneath accumulation. Traders can use this very apparent line of assist at $120 as a cease, though I’d use weekly closing costs as an alternative of each day to reduce potential whipsaws at that stage: $120 is each the 200-day shifting common in addition to the place the inventory bottomed in early August. Should we revisit that low and maintain it, I might truly add there. It’s a 12 ahead PE ratio with a 3.5% dividend yield. I’m snug with the chance/reward from these ranges. DISCLOSURES: Josh is lengthy shares of PSX as of the time of this writing. All opinions expressed by the CNBC Pro contributors are solely their opinions and don’t mirror the opinions of CNBC, NBC UNIVERSAL, their father or mother firm or associates, and might have been beforehand disseminated by them on tv, radio, web or one other medium. 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