Marathon Oil Corporation (NYSE:MRO) — This energy company is in the process of selling its Norwegian and U.K. assets. It will concentrate on its profitable North American assets, including those in the Eagle Ford shale formation. Capital IQ expects the company will invest $5.9 billion in capital spending in 2015, up from an estimated $5.4 billion in 2014.
Its analysts estimate 2014 earnings, which are scheduled to be reported on Feb. 18, will fall 3% to $2.57 per share and decline another 24% in 2015 to $1.96. However, much depends on the price of oil, and their 12-month price target for MRO stock of $36 is just 5.2 times enterprise value to consensus 2015 EBITDA. They also note Marathon Oil has better debt leverage than its peers.
MRO stock fell from a 52-week high of just under $42 in September to a low below $25 in December, down more than 40% in just over three months.
However, since mid-December, MRO stock has formed a triple-bottom with twin buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR). A break above its 50-day moving average at $28.03 would pierce its bearish resistance line and provide a strong base for a significant move higher. Traders should buy MRO stock on a close above $28.03 for a trading target of $36, which would result in 28% gains.
Investors may want to hold shares for a significant move higher based on an increase in the price of oil and the company’s outstanding record of success. With an annual dividend of $0.84 a share, MRO stock currently yields 3%.
