Petroleum refining company Tesoro (TSO) has been added to Goldman Sachs' 'Conviction Buy" list, an assortment of stocks presumed to be the firm's top picks.

Goldman initiated coverage of the San Antonio-based firm's stock with a "Conviction Buy" rating and a $121 price target saying that it remains undervalued, will benefit from its Western Refining acquisition and can generate solid cash flow.

Shares of Tesoro were climbing over 2.3% during mid-morning trading on Tuesday.

"In our 6-month $121 price target, we estimate that $55 of value comes from retail/ marketing and $48 comes from TLLP/logistics. Marketing provides a source of constant cash flow and logistics generates IDRs that we value at $11 per share," Goldman wrote.

The firm noted that Tesoro's deal for Western Refining could drive earnings improvement from "better Permian crude access, higher product pricing and $100-125 mn in cost reductions."

Goldman contended that Tesoro is also a capital allocation "winner."

What's Hot on TheStreet

Respect the stock charts: Don't feel too relieved by volatile tech name Nvidia (NVDA) finishing in the green on Monday after a violent selloff.

Nvidia underwent a "key reversal" on Friday that could send the stock plunging another 36%, BMO technical analyst Russ Visch said in a new note. Visch points out that normally, these pullbacks tend to lead to the stock falling back to its 200-day moving average. In the case of Nvidia, the 200-day moving average is $96.70, or $36% below Monday's closing price of $149.97. "Considerable downside risk exists here," said Visch.

On Friday, shares of Nvidia were off to another big rally, hitting new all-time highs of $168.50 following an analyst pontificating the stock could surge to $300. But the party abruptly ended Friday afternoon and continued into most of Monday's trading session. The reversal in one of the hottest tech stocks around spooked the market, pressuring shares of other high-flyers in the space such as Amazon (AMZN) and Apple (AAPL) .

Apple and innovation: The reality of the here and now is that the public and would-be buyers of Apple's stock harbor greater doubts about Apple's ability to innovate than in many years, reports TheStreet. Apple did nothing to quiet those concerns by introducing its new voice activated speaker, sources explained to TheStreet.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.

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