While consumers are reaping the benefits of the large drop in the price of oil since the summer, investors in the energy sector have taken a beating. Long-term investors know the importance of keeping an energy allocation as part of a well-rounded portfolio because, despite the ups and downs in spot pricing, ultimately demand is always there.

A new research report from the refining analysts at Cowen points out that recent strong refining stock price performance has been driven by three consecutive quarters of better-than-expected results, with the most recent quarter enhanced by healthy product markets and higher than normal co-product realizations. The bottom line, the refiners can continue strong performance.

The Cowen team is keeping a positive view on the refining sector due to solid underlying earnings potential and the developing theme of logistics growth. Here are the top stocks rated Outperform to buy now.

Delek US Holdings Inc. (NYSE: DK) is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Ark., with a combined nameplate production capacity of 140,000 barrels per day. The stock is another Permian Basin play, and Credit Suisse is also bullish on the prospects.

Delek investors are paid a 1.9% dividend. The Cowen price target is $43, and the Thomson/First Call consensus price target is $41.21. Delek closed Tuesday at $30.89, so trading to the Cowen target would be almost a 40% gain.

ALSO READ: 4 Big Tech Stocks Ready to Breakout and Trade Higher

Marathon Petroleum Corp. (NYSE: MPC) is also a top refining name investors can buy now in hopes of substantial gains down the road. Marathon has a diversified business that operates through Refining & Marketing, Speedway and Pipeline Transportation segments. The company owns and operates seven refineries in the Gulf Coast and Midwest regions of the United States that refine crude oil and other feedstocks, and it distributes refined products through barges, terminals, and trucks, as well as purchases ethanol and refined products for resale.

Marathon shareholders are paid a 1.9% dividend. The Cowen price target is $120. The consensus target is much lower at $108.34. Marathon closed Tuesday at $94.63. Trading to the target is just short of a 30% gain.

PBF Energy Inc. (NYSE: PBF) engages in the refining and supply of petroleum products. It provides gasoline, ultra-low-sulfur diesel, heating oil, jet fuel, lubricants, petrochemicals and asphalt, as well as unbranded transportation fuels, heating oil, petrochemical feedstocks and other petroleum products. It has also stated in the past that the rising RIN costs will be passed along to the consumer, which makes for bad publicity but will increase earnings.

Shareholders are paid an outstanding 4.5% dividend. Cowen has a $35 price target, and the consensus target is $31.11. Shares closed Tuesday at $26.68.

Tesoro Corp. (NYSE: TSO) is another one of the Cowen top picks for this year in refining. Many Wall Street analysts cite the possibility for meaningful EBITDA growth driven by the Carson refinery, which the company acquired earlier this year, and eventually through the company’s huge Port of Vancouver crude logistics project.

Tesoro investors are paid a 1.7% dividend. The Cowen price objective for the stock is $90, while the consensus target is lower at $80. Tesoro closed Tuesday at $72.72.

ALSO READ: The 5 Most Loved Dow Stocks Since the V-Bottom

Valero Energy Corp. (NYSE: VLO) has 56% of companywide refining capacity located in the U.S. Gulf Coast, which makes Valero well positioned to benefit from the ongoing infrastructure debottlenecking of inland crude oil supply in 2014 and beyond. Some Wall Street estimates have the company generating an astounding free cash flow compounded annual growth rate (CAGR) of 24% during the period from now to 2016.

Valero investors are paid a 2.2% dividend. The Cowen price target stock is $70, and the consensus is at $64.31. Valero closed Tuesday at $51.16.

Western Refining Inc. (NYSE: WNR) has received big earnings revision boosts from Wall Street over the past few months, with estimates for 2014 and 2015 increased by 8%. The refining segment operates refineries in El Paso and Gallup, N.M. The Wholesale segment includes a fleet of crude oil and finished product truck transports and wholesale petroleum products operations in nine states.

Investors are paid a respectable 2.6% dividend. The Cowen price target is $60, and the consensus figure is $54. The stock closed Tuesday at $45.74.

ALSO READ: 4 Oil Service Stocks With Huge Upside Despite Lower Oil Prices

In an energy sector that has struggled, the refiners have shined, and the Cowen team has been spot on all year in their assessment of these top stocks. Investors looking to buy may want to scale in capital and wait for a pullback to complete the purchase.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.