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Jim Cramer took to the air on Friday stating that refiners remain in a sweet spot because of the explosion over the last 6-8 years in domestic oil production and the fact that a major refinery has not been built in the country since 1976. He believes the best way to play this "oligopoly" is to pick refiners that have the best access to the robust production coming from the middle of the country and are somewhat trapped there by a lack of infrastructure (Bakken and Eagle Ford). Here are his two favorite refinery stocks right now.

HollyFrontier (NYSE:HFC) operates as an independent petroleum refiner and marketer in the United States. The company operates 5 refineries with a combined crude oil processing capacity of 443,000 barrels per day.

4 reasons HFC offers value at $51 a share.

  1. Despite the recent run up, the stock is still cheap at just over 6x trailing earnings and operating cash flow.
  2. The company has a solid balance sheet with approximately $1B in net cash on the books. The shares also yield 2.3%.
  3. Consensus earnings estimates for both FY2013 and FY2014 have gone up more than 15% and 10% respectfully over the past three months.
  4. The median price target on the shares by the 16 analysts that cover the stock is $60.50 a share. S&P also has a "Buy" rating on the shares.

CVR Refining, LP (NYSE:CVRR) engages in the refining of petroleum in the United States. It owns one oil refinery located near Cushing, Oklahoma; and the Wynnewood crude oil refinery located approximately 65 miles south of Oklahoma City, Oklahoma. The company also owns and operates approximately 350 miles of feeder and trunk pipelines; 125 crude oil transports; 6.0 million barrels of owned and leased crude oil storage capacity storage tanks.

4 reasons CVRR offers value at $33 a share:

  1. The stock is very cheap at just 5x forward earnings.
  2. Operating cash flow has grown over 500% over the last two fiscal years and CVRR is priced at just over 5x operating cash flow.
  3. Renowned Carl Icahn purchased a majority stake in the parent firm CVR Energy (NYSE:CVI), which has doubled since he purchased the shares. CVI spun CVRR out in January and still retains an over 80% stake.
  4. Given its robust cash flow and earnings, and published guidance on distribution policy; the shares have a forward yield near 20%.
Source: Cramer's 2 Favorite Refineries