Marathon Petroleum Corporation
) hit a 52-week high of $65.37 on Wednesday, January 16. In fact,
the Findlay, Ohio-based independent oil refiner and marketer -
spun out of parent
Marathon Oil Company
) in 2011 - has seen its stock price climb more than 20% since
the beginning of November last year.
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Despite this price appreciation, we remain optimistic on the
firm's near-term prospects, supported by consistency in its
earnings/cash flows, attractive fundamentals and a positive
outlook. These factors are reflected in Marathon Petroleum's
Zacks Rank #2 (Buy), implying that it is expected to outperform
the broader U.S. equity market over the next one to three months.
Why the Bullishness?
Our bullish investment theme stems from Marathon Petroleum's
scale advantage, impressive asset quality, and an extensive
midstream/retail network that diversifies its portfolio and
provides more stable revenue streams. We believe management's
recently commenced $2 billion share repurchase program and the
proposed acquisition of
) Texas City refinery could further boost shareholder value.
Marathon Petroleum's low debt ratio and hefty cash balance add to
the positive sentiment.
Based on solid expected performance from the company, eight out
of 12 estimates for 2012 have moved higher in the past 60 days,
pushing the Zacks Consensus Estimate up by 21 cents (or 2.2%) to
$9.62. For 2013, six out of 12 estimates moved north in the past
60 days, helping the Zacks Consensus Estimate advance by 92 cents
(or 10.9%) to $9.34.
Other Stocks to Consider
In addition to Marathon Petroleum, there are certain other
downstream energy operators like
Global Partners L.P.
Northern Tier Energy L.P.
CVR Energy Inc.
) that offer even more value and are worth buying now. All these
partnerships sport a Zacks Rank #1 (Strong Buy).