Ready to Fall? Stocks Trading at High Levels Despite the High Price of Oil (KMB, WNR, ALJ, VLO, FDX, UPS)

Kimberly-Clark

reported earnings on Monday and told investors something they should have already known – the rise in in price of oil-related materials is cutting into margins, and, thus, profits. As a result, the company lowered its 2011 earnings forecast. Share prices reacted by dropping 2.7% on the day. It seems as though investors were completely unaware of the problems high oil and commodity prices could potentially cause for companies like Kimberly-Clark, as the stock was near a 52-week high before Monday's report. The complacency shown in the above example is somewhat bewildering, and has investors wondering which other companies have yet to factor high commodity costs into their current share prices. The following companies are trading at relatively high levels given the current price of crude, and may be ripe for a fall:

- When crude spikes, refiners feel the pain. The high cost of oil cuts into refining margins and decimates gasoline demand. The result is low profits and usually lowered earnings forecasts. Western Refining

: Shares of this company are trading near their 52-week high ($19.50), currently at $18.69. Western Refining is set to report earnings before the bell on May 5. Alon USA Energy

: Shares of this company are trading near their 52-week high ($15.58), currently at $14.28. Alon is set to report earnings after the bell on May 5. Valero Energy

: Shares of this company are trading just below their 52-week high ($30.96), currently at $29.11. Valero is set to report earnings before the bell on April 26th and should set the tone for other refiners in the space.

- While delivery and freight corporations are usually able to pass rising costs onto consumers relatively well, they still have to deal with a decrease in margins for a period of time. The fuel surcharges put in place by these companies to offset high transportation costs lag behind the price of oil, as they are adjusted monthly. If oil prices are rising continuously, the corporations are consistently behind. Also, when shipping costs rise, consumers tend to use less costly means of delivery rather than more profitable express services. FedEx

: Shares of this company are trading at the top of their 52-week range, currently at $93.85. Although FedEx posted solid earnings in March, the company acknowledged that it was hurt by rising fuel prices. United Parcel Service

: Shares of this company are also trading at the top of their 52-week range, currently at $73.62. UPS is set to report earnings before the bell on April 26th. It will be interesting to see how the company has handled the jump in oil prices, as the price of crude is 14% higher than it was when FedEx reported earnings. The spike in crude has already caused a decline in share prices of companies in the travel & leisure, shipping, and airline sectors. The companies listed above have escaped, thus far, unscathed. Historically, high oil has affected these companies negatively, both in terms of profits and share prices. Why their stock has remained at such high levels is anyone's guess, but those levels are unlikely to hold should oil maintain its current price or move higher.