Marathon Oil: Snail's pace progress

Posted Nov 5th 2009 2:50PM by Joseph Lazzaro
Filed under: Stocks to Buy, Marathon Oil (MRO)

Marathon Oil Corp. (NYSE: MRO) continues to inch along, 'totally un-spectacularly,' with performance weighed-down by the recession's impact on refined products.

I am Reiterating my Buy rating for the company, first recommended on April 20, 2009 at a price of $28.55, but the call recommends only establishing a 25% position, in total.

To be sure, Marathon's annual oil/natural gas production should increase at an adequate rate in FY2010, but low refining margins will continue to hurt results: some improvement in margins should start by the end of 2010. The First Call FY2009/FY2010 EPS estimates for MRO are $1.94 to $3.78.

Technically, Marathon's stock chart is in a mild, inconclusive uptrend, with numerous violations of the key, 50-day moving average, which indicates institutional investor uncertainty.

Stock Analysis: Marathon Oil Corp. 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. Under any circumstance, don't buy more than 25% of your MRO position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $17.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: mro