- Marathon Oil (NYSE:MRO) stock is staging an impressive comeback in early 2022.
- Persistently high petroleum prices aren’t the only reason to invest in the company.
- Investors can choose to be patient and stay the course with Marathon Oil.
Marathon Oil is a well-respected giant among American petroleum producers. Nimble traders, assuming they had good timing, have profited from the ups and downs in MRO stock.
Since the stock isn’t super-expensive, it’s an affordable way to get exposure to the petroleum market. There’s no denying that when the WTI oil price rises sharply, this tends to benefit Marathon Oil and its stakeholders.
Don’t get the wrong idea, though. Not all petroleum extractors are the same, and there are reasons to believe that Marathon Oil stands apart from its competition.
So, get ready to drill for potential profits as we explore the bullish thesis for a long-term position in Marathon Oil.
What’s Happening With MRO Stock?
MRO stock made a run for $40 in 2007 and then again in 2014. However, believe it or not, the stock pulled back to just $3 and change in 2020 as the Covid-19 pandemic sent shock waves through the commodities markets.
Fast-forward to early 2022, and commodities are red hot. Natural gas had its moon-shot in 2021. This year it’s oil’s turn to shine.
Exogenous events propelled the WTI per-barrel petroleum price to $130 recently, though it pulled back to around $100. Meanwhile, MRO stock surged to $23 — could this signal a return trip to $30 or even $40?
No guarantees, but it’s entirely possible. The stock isn’t expensive even after its recent bull run, as Marathon Oil’s trailing 12-month price-to-earnings ratio is a very reasonable 19.3x.
The company is profitable, and as we’ll discover in a moment, the profits are widening and Marathon Oil isn’t afraid to deliver some of its returns to the loyal shareholders.
From a Loss to a Profit
Now, let’s get down to the nitty-gritty of Marathon Oil’s fourth-quarter and full-year 2021 financial results. Consider, first of all, that the company suffered a $338 million net earnings loss in 2020’s fourth quarter.
Then, the bottom-line picture started to improve. Marathon posted a net earnings profit of $184 million in 2021’s third quarter, and then a net profit of $649 million in 2021’s fourth quarter.
Also in 2021, Marathon Oil executed $1 billion worth of share repurchases since October. Stock-share buybacks are often a positive sign, as they can signal a company’s confidence in itself. Plus, consistent share repurchases can help keep a stock’s price moving higher over the long term.
Finally, we can’t ignore the dividends, which can enhance a loyal investor’s returns over time. Marathon Oil recently enacted another dividend raise, representing the company’s fourth consecutive quarterly base dividend increase and a cumulative 133% dividend increase.
What You Can Do Now
Petroleum prices will rise and fall — there’s no denying it. Yet, investing in great companies is a solid strategy regardless of the ups and downs of the commodities markets.
Marathon Oil’s swing to profitability has been truly impressive. It’s a sign of financial health, and so is the company’s focus on share buybacks and dividend increases.
All in all, MRO stock offers exposure to rising petroleum prices, but that’s not the only reason to invest in Marathon Oil. It’s a financially healthy business that will not hesitate to reward its shareholders, time and again.
On the date of publication, Louis Navellier had a long position in MRO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.