Oil refiner stocks were the stars of the energy sector in 2015, but they have been absolutely crushed so far in 2016. While the Energy Select Sector SPDR (ETF) XLE 0.8% is up 11.3 percent this year, refiner stocks are averaging a more than 40 percent decline.

Goldman Sachs analyst Neil Mehta believes the selloff has created some buying opportunities for investors, but he warns that stock picking is critical in the unpredictable oil market.

“We continue to see coastal refiners as advantaged vs Mid-Con peers given access to discounted medium/heavy crudes, higher asset complexity and, often, the ability to export refined product,” Mehta explained.

In addition to a preference for coastal refiners, Goldman also encourages investors to identify refiners with significant non-refining business segments, such as retail or midstream.

Tesoro Corporation TSO 0.74% is an excellent example of a refiner with both midstream and retail exposure, and Goldman has upgraded the stock from Neutral to Buy. The firm also names…

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