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…
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!