As oil prices hold near five-year lows, gas stations may be the best way to play the energy sector right now, analysts said. CST Brands, Murphy USA and Marathon Petroleum are small, pure plays to watch, they said.
"Retailers of gasoline enjoy their largest profit margins in falling price environments like we are in right now," said John Kilduff, founding partner of Again Capital.
When oil prices were going up three or four years ago, several oil companies hoped to benefit from their operations in oil and gas exploration, a historically lucrative business known as the "upstream."
The companies spun off the traditionally weaker business of oil processing and gas stations, known as the "downstream." Last year, several refineries went even further, spinning off the retail arms into individual stocks. Now as oil prices fall, those gasoline sellers are outperforming their parent firms.
"The timing for the spinoffs has been great (for investors), and the increased co-location of convenience stores at the retailers also helps the profit engine with high margin goods like soda and other snack foods," Kilduff said.
The hot gas station trend is most clearly seen with refinery Valero's spinoff of its retail side CST Brands in May 2013. CST operates 1,900 gas stations in North America and its stock has outperformed Valero since September.