Market's drop creates buy opportunity with Marathon (MRO)

Has oil's high price given you the shakes? Well relax, and leverage oil's high price by considering Marathon Oil's (NYSE: MRO) shares.

Marathon has the 'oil triple play,' of sorts, what one likes to see in an oil operation: a large, geographically-wide exploration footprint, very good production, and strong refining operations.

Further, that last tangible may be the most valuable, given the barely-adequate refinery capacity in the United States. What's more, Thursday's market sell-off that saw the Dow close down about 362 points to 13,567.87, has created a buying opportunity with Marathon. MRO's shares closed down $1.46 to $57.63. And with a p/e of 9, MRO's risk/return ratio is low.

MRO's drawbacks: Analysts are keeping an eye on costs, and healthy gasoline refining margins may narrow heading into early 2008. But unless there is a substantial increase in global oil production, or a comparable reduction in U.S. gasoline consumption, Marathon is well-positioned for the immediate years ahead. The Reuters F2007/F2008 EPS consensus estimates for MRO are $6.04/$6.44.

The First Call mean rating for MRO is: Buy. [20 firms.] Mean 2007 target: $63.75. [high: $75, low: $46.50.]

Stock Analysis: Marathon is moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 1 year should be rewarded from MRO's shares. Sell/Stop Loss: $39.