Goldman Sachs has turned bullish on a specific area in the energy space, naming Valero Energy (VLO), HF Sinclair (DINO), and Marathon Petroleum (MARA) as its top oil stock plays.

Moreover, it has buy ratings on all three of those stocks, slapping price targets of $237 on Valero, $61 on HF Sinclair, and $239 on Marathon, leaning into refining strength amid growing geopolitical risks.

Naturally, the timing of the list’s reveal isn’t a surprise. 

Oil markets over the past few weeks have been rattled by growing tensions in the Middle East, which have pushed Brent crude over $100 per barrel following a steep 50% rally. 

At the same time, supply-side disruptions and Red Sea shipping risks have compelled markets to rely more on U.S. refining capacity. 

In fact, as veteran analyst Tom Lee recently noted, the U.S. may actually benefit from higher oil prices. Because it’s a net exporter, it’s better insulated than oil-importing economies.

Hence, that dynamic creates a unique window of opportunity for investors.

Goldman points to near-term tailwinds building for refiners, led by healthier margins and tighter inventories. The bank’s focus, though, was on picking companies that can efficiently combine scale with robust cash flow figures and a rich history of returning capital to shareholders. 

Each of its picks underscores that strategy, offering both resilience and long-term upside.

Goldman Sachs highlights select oil stocks as shifting market dynamics reshape the broader energy outlook.

Cheunghyo/Getty Images

Oil stock dividend and valuation metrics

• Forward dividend yield: Valero Energy 2.00%, HF Sinclair 3.32%, and Marathon Petroleum 1.72%
• Forward dividend rate: Valero Energy $4.80, HF Sinclair $2.00, and Marathon Petroleum $4.00
• 3-year dividend growth (CAGR): Valero Energy 5.04%, HF Sinclair 6.62%, and Marathon Petroleum 12.82%
• Consecutive years of dividend growth: Valero Energy, 3 years; HF Sinclair, 0 years; and Marathon Petroleum, 4 years
• Forward P/E (GAAP): Valero Energy 15.87, HF Sinclair 14.57, and Marathon Petroleum 15.01
• Net income margin: Valero Energy 2.03%, HF Sinclair 2.15%, and Marathon Petroleum 3.04%
• Cash from operations: Valero Energy $5.83 billion, HF Sinclair $1.32 billion, and Marathon Petroleum $8.25 billion Source: Seeking Alpha.

Valero Energy is the most obvious refining winner

Valero Energy is usually a standout in the refinery space when oil markets get messy.

Given the company’s tremendous asset quality and Gulf Coast positioning, it is advantageously placed for the current backdrop. 

What gives it the edge, in particular, is its ability to run heavier fuels and effectively convert them into higher-value products.

More Oil and Gas:

• Energy giant sends blunt $20 billion message on dividend growth
• 147-year-old oil giant just raised dividend 4% in 2026
• Top energy stocks to buy amid Venezuela chaos

That’s obvious from its superior profitability profile, spearheaded by a 13% gross margin, that comfortably trumps its peers on the list.

Moreover, it has resumed buying Venezuelan crude oil and expects those barrels to form a meaningful part of its feedstock mix, bumped by prior upgrades at Port Arthur that grew its heavy-crude capacity. 

So with its Gulf Coast systems, it has many more ways to maneuver to protect margins in the current market backdrop. Valero’s Q4 numbers back that up, with adjusted earnings coming in at $3.82 a share, while stockholder cash returns reached $4 billion for full-year 2025.

There’s still a wrinkle, however.

Valero plans to cease refining operations at Benicia next month, as it looks to evaluate its California strategy. That downer is effectively outweighed by the upside it’s set to gain from its advantaged Gulf Coast footprint and powerful cash generation, not to mention its January dividend increase to $1.20 per share quarterly.

HF Sinclair is the overlooked value play with more moving parts

HF Sinclair remains the obvious quality leader and edges ahead in terms of its attractive valuation and improving margins, especially in tighter West Coast markets where supply has been a lot more shaky.

Moreover, its fundamentals back up its growth story.

HF Sinclair’s Q4 adjusted profit came in at a superb $1.20 per share, comfortably ahead of analyst expectations, while adjusted refinery gross margin jumped more than 50% to $16.28 per barrel and throughput surged to 620,010 barrels per day. 

Another one of its competitive edges is that it benefits from businesses outside its core refining, including midstream, marketing, and lubricants.

That makes earnings a lot less one-dimensional. Also, as an added sweetener, its board maintained its quarterly dividend at $0.50 a share.

On top of that, California supply is tightening with refinery closures, and even small shifts in West Coast fuel supply can matter a lot more than they used to. 

Marathon Petroleum is the cash-return machine with a West Coast slant

Marathon Petroleum’s case is all about execution. 

Goldman Sachs analysts argue the market is underappreciating the company’s strong refining business, especially its West Coast exposure and jet fuel positioning.

West Coast jet-fuel premiums are hovering near their peak of almost two years, while California’s fuel system has gotten even tighter on the back of geopolitical hiccups and refinery constraints.

Related: Bank of America resets Nvidia stock forecast after meeting with CFO

The fundamentals support its bull case, too.

Marathon reported Q4 earnings of $4.07 a share, beating expectations with refining margins rising by 44% from the prior-year period. Also, the oil giant returned about $1.3 billion to shareholders in the quarter, wrapping up last year with $4.4 billion available under its buyback authorization. 

Furthermore, Marathon’s Los Angeles refinery’s modernization project is complete, and that feeds into its 2026 capital plan, which includes many more high-return investments across major refining sites. 

Energy stocks outperform as oil prices fuel powerful rally

• 1-month return: Valero Energy 19.48%, HF Sinclair 19.55%, and Marathon Petroleum 18.18%
• 3-month return: Valero Energy 48.32%, HF Sinclair 28.85%, and Marathon Petroleum 38.84%
• 6-month return: Valero Energy 49.34%, HF Sinclair 16.86%, and Marathon Petroleum 26.64%
• 9-month return: Valero Energy 73.52%, HF Sinclair 48.24%, and Marathon Petroleum 39.65%
• Year-to-date return: Valero Energy 48.24%, HF Sinclair 32.01%, and Marathon Petroleum 43.70%
• 1-year return: Valero Energy 83.13%, HF Sinclair 85.56%, and Marathon Petroleum 56.31% Source: Seeking Alpha

Related: Bank of America revamps Micron stock price target post earnings