Updated from 7:59 a.m. EDTHistorically speaking, economic downturns, coupled with rising oil and gas prices, are a terrible time to own oil refining stocks. Refiners make money from the "crack spread," which is the differential between the price of credit oil and petroleum products extracted from it -- that is, the profit margin that an oil refiner can expect to make by cracking crude oil. It certainly is not surprising that sector margins have been severely compressed with the recent parabolic move in crude oil. So why the heck might you want to own a refining stock? Well, simply put, it is an indirect short play on the price of crude oil. If oil prices continue to drop, say to $80, crack spreads will naturally start to widen, which will be a huge plus for the refiners. Some stocks to consider include Valero ( VLO - Get Report), Tesoro ( TSO) and Frontier ( FTO). To read the rest of the story and find out why these refiners are worth a look, please click here.
A note from James Altucher:Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to atheme but also offer significant analysis as to why the stocks are cheap.Here are some examples: