What's Goldman Saying About Oil Majors And Refiners?

This week is a big week for oil majors and refiners. The majority of the names under Goldman Sachs' coverage report Q1 earnings this week.

Analyst Neil Mehta has been using three themes when picking stocks in the space:

• 1. Coastal refiners over mid-continent refiners
• 2. Canadian names with strong free cash flow
• 3. Exxon Mobil Corporation (NYSE: XOM) as top pick among oil majors as part of a beta barbell strategy

As part of this general approach to the sector, Mehta names four other stocks to buy prior to earnings in addition to Exxon: Cenovus Energy Inc (USA) (NYSE: CVE), Suncor Energy Inc. (USA) (NYSE: SU), Marathon Petroleum Corp (NYSE: MPC) and PBF Energy Inc (NYSE: PBF).

Related Link: Big Oil In The Earnings Spotlight

Mehta noted that forward guidance for these companies will likely be more important to the market than Q1 results.

“Given depressed 1Q2016 crude prices and crack spreads, we believe investors will be willing to look through first quarter results, if there is positive go-forward commentary,” he explained.

Other Ratings

In addition to the five names to buy ahead of earnings, Goldman also has Sell ratings on Phillips 66 (NYSE: PSX), CVR Energy, Inc. (NYSE: CVI) and CVR Refining LP (NYSE: CVRR).

Goldman has a Neutral rating on ConocoPhillips (NYSE: COP) and Chevron Corporation (NYSE: CVX).

Disclosure: The author holds no position in the stocks mentioned.