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Marathon Petroleum (MPC): Time to Buy!

By Steve Reitmeister, Editor-in-Chief, WallStreetZen
September 9, 2024 2:48 PM UTC
Marathon Petroleum (MPC): Time to Buy!

Look at this 1 year price chart for oil and you will quickly understand the premise behind this week’s featured stock; Marathon Petroleum (MPC).

There are 2 key things to appreciate here. First, is that every time oil dips under $70 it bounces. This is mostly because OPEC has gotten much better at controlling production to ensure higher prices so they maximize profit on their energy production. 

Second, let’s remember that the Fed, and many other Central Banks around the world, will be lowering rates as we go forward. This form of accommodation is a proven catalyst for economic growth which time and again has typically increased the demand for oil. 

So, under the banner of “buy low, sell high” this tells me it is time to strongly consider new positions in the energy patch. And because of that I am going for one of the best operators in the industry, Marathon Petroleum (MPC).

This stock passes all 4 steps of our proprietary stock selection process with flying colors. 

This starts with a review of top Wall Street analysts based on the performance of their stock recommendations. Even though the average analysts sees $202 as fair value for shares, it is nice to appreciate that the following top performers are pounding the table on shares: 

$211 target from Neil Mehta @ Goldman Sachs (Top 7% of all analysts)

$230 target from Justin Jenkins @ Raymond James (Top 1% of all analysts)

$231 target from Lloyd Byrne @ Jeffries (Top 4% of all analysts)

Even $202 is well above the current price under $170. But nice to see that shares could easily run much higher in the year ahead. 

The second step in our process is to review the Zen Score with its 38 due diligence checks for every stock. MPC’s score of 47 is nearly 50% better than the industry average. Financials, Performance and Dividend are the strongest areas for the Zen Score. And on the dividend front it is nice to see the ample 3% yield paid by Marathon to help pad your returns. 

The third step in the process is to check our 2 quant filters. First is the POWR Ratings which checks 118 fundamental factors for every stock. What jumps out the most is the Quality score in the top 8% of all stocks which is a sign of operational prowess. 

The operational excellence comes shining through with our next quant check with the Zacks Rank and a review of the earnings picture for the company. MPC has had over 20 straight quarters with earnings beats which no doubt explains why shares have risen 8X since the end of Covid far surpassing most of its peers. 

The most recent quarterly earnings included a 35% beat in not the best conditions. This bodes well for when oil prices bounce once again and earnings press higher (and the share price along with it). 

The fourth and final step in the stock selection process is for me to apply my 44 years of investing lessons learned to find the best stocks. What impresses me most about MPC is the consistency of earnings growth even when oil prices have been soft. Then they truly “step on the gas” when prices rise leading to exceptional earnings growth and soaring share price. 

Taking it back to the top, the time to buy oil stocks is when prices are low and ready to bounce. Most signs point to that being the case now. 

Next is to pick the industry leaders with the highest probability to excel going forward. Marathon perfectly fits that bill too. So that means its time to pump some of these energy shares into your portfolio. 

What To Do Next?

Marathon Petroleum (MPC) is just one of the 12 timely stocks found in my Zen Investor portfolio.

In fact, more aggressive investors might want to discover the more speculative small cap oil driller in the portfolio because of truly explosive upside potential. 

To learn more about my exclusive 4 step process to find more 100%+ stock winners...and to get your hands on the current top 12 recommendations…then all you need to do is click the link below. 

Discover the Zen Investor portfolio > 

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

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