Marathon Petroleum ( NYSE:MPC )
Marathon Petroleum Corp (NYSE: MPC) is a US-based energy company that specializes in petroleum product refining. Its primary segment consists of refining and marketing, however, it also operates a smaller midstream transport segment. With all eyes on oil stocks, Mentions of Marathon Petroleum have increased by a massive 350% over the last day, prompting investors to wonder if Marathon Petroleum is a good investment. Currently, shares of Marathon are trading for $107.97, up 64.44% YTD.
Is Marathon Petroleum a Good Investment - Positives
There are a ton of reasons to add Marathon Petroleum to your portfolio, here are a few of the big ones.
Marathon’s EBITDA-adjusted earnings equated to a huge $1.4 billion during Q1. Considering they made just $23 million during Q1 2021, it’s clear things are on the up and up for Marathon.
As oil prices skyrocketed, Marathon benefited from massively increased margins. During Q1 2022, they made $15.31 per barrel, during the same year-ago period, they made just $10.16.
Marathon recently announced a joint venture to create a $2 billion renewable fuel project. This is massive for the long-term, oil is out and renewable is in. The company that can cash in on this change will likely do extremely well.
Marathon Petroleum is currently the 3rd largest holding within the Invesco S&P 500 Pure Value ETF, an index that tracks value stocks within the S&P 500. Seemingly institutional investors believe in Marathon and as the saying goes ‘follow the money’.
Marathon has been using its increased cash flow to buy back a ton of stock, helping to bolster the company’s share price. It completed around $2.7 billion worth of stock buybacks in recent times and shows no signs of slowing up yet.
Is Marathon Petroleum a Good Investment - Negatives
While there are plenty of reasons why adding Marathon to your portfolio might be a good idea, it’s equally important to analyze the negatives. Here are a couple of reasons why Marathon might not be all it's cracked up to be.
While Marathon has invested massive sums into its renewable fuel project, a competing company Phillips 66 is expected to finish theirs shortly after. While this isn’t a massive immediate concern, the Phillips facility will produce 70 million more gallons than Marathon. Therefore, Phillips could potentially undercut Marathon in the future.
There’s a reason Marathon’s profits went up so much over the past few months; massively increasing oil prices. When prices begin to return to usual levels, Marathon’s cash flow will decrease significantly. Therefore, if you buy Marathon stock, make sure to get out while oil prices are high.
Hype Asset of the Day - Conclusion
Marathon Petroleum is in a rather strong position at the moment. They have done well to capitalize on the oil price surge and put the cash earned to good use. As long as oil prices stay high, it’s unlikely that Marathon will decrease in value too heavily, but as soon as the correction occurs, expect to see blood in the water. If you’d like to receive more trending stocks direct to your inbox, check out our premium plans. Alternatively, if you’d like to learn more about the services offered by HypeIndex, check out our FAQ page.
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