Goldman Updates Oil Majors Outlook, Likes Canada And Coastal Refiners

In a new report, Goldman Sachs analyst Neil Mehta update’s the firm’s bullish outlook for a number of oil stocks. The price of crude is up more than 57 percent since its February bottom, but Goldman sees more upside ahead for a number of oil names.

According to Mehuta, the three types of stocks that oil investors should be buying are stocks with exposure to Canada, coastal refiners and oil majors with strong free cash flow (FCF) numbers.

Goldman names Suncor Energy Inc. (USA) SU and Cenovus Energy Inc (USA) CVE as its top Buy-rated Canadian oil stocks.

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Goldman is anticipating that differentials will compress following refiner turnaround season, and prefers coastal refiners to mid-con names. In fact, the firm has Sell ratings on mid-con plays CVR Energy, Inc. CVI and CVR Refining LP CVRR and Buy ratings on coastal plays Marathon Petroleum Corp MPC, Valero Energy Corporation VLO and PBF Energy Inc PBF.

For oil majors, Goldman continues to look for FCF winners. The firm prefers Buy-rated Exxon Mobil Corporation XOM to Neutral-rated Chevron Corporation CVX. Goldman now has a $96 target for Chevron and a $90 target for Exxon.

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