It's a difficult call, but I'm Reiterating my Buy rating for Marathon Oil (NYSE: MRO), first recommended on April 20, 2009 at a price of $28.55. Marathon's stock has meandered, largely due to reduced demand for Marathon's heavy/sour crude -- a negative trend that's likely to continue through at least mid-Q3.
Still, I'm sticking with the stock, on the argument that both revenue and earnings, include margins, will improve in 2010 as the U.S./global economic recoveries take hold, and oil demand rebounds. The First Call FY2009/FY2010 EPS estimates for MRO are $1.97 to $3.72.
Stock Analysis: Marathon Oil is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in MRO now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your MRO position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $17.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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