Marathon Petroleum (MPC)

Buys back a lot of shares, reducing shares by 43% since end-2015. Refineries don't need higher oil prices to do well. Shares are up 240% over 10 years.

Trump wants the oil price to come down to offset any inflation from tariffs. This is why investors have been selling oil shares.

He just bought it. Since 2021, they've bought nearly half their shares. Been buying aggressively and will buy another $5.9 billion. They're printing cash by generating so much cash flow. They increased their dividend by 10% with a forward PE of 11x.

MPC is now trading at 8.2x times' Forward P/E. In the most recent quarter, MPC’s revenue declined 32% to $36.8B, beating estimates of $33.9B and adjusted EBITDA came down from $9B to around $4.5B; the decline was largely expected after high oil prices in 2022. The balance sheet is strong, with net debt of $17.1B and net debt/EBITDA of around 0.8x. Given the record cash flow generated from the oil tailwind in the last few years, the company has implemented one of the more aggressive share-repurchasing programs.  Going forward, MPC’s fundamentals and share price would be heavily affected by the movement in oil prices. However, we think MPC just had a solid quarter, and still looks cheap, while MPC is fully committed to buying back more shares. We would be comfortable buying in the context of the sector.
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When OPEC raises oil prices, it will hurt MPC's margin, but this is a cheap stock that's well run.

Sells at 5x earnings and Goldman recommended it today.

From a PE valuation standpoint, refiners tend to work together. You see spreads widen or narrow off the raw product of oil, into the different commercial products. This company has been a good performer over the years. Not having great visibility into the cycle and to the spreads, he would probably pass on making this a core holding.

He sees resistance around $51. The chart shows a double top in 2015. This is a good indicator that the 2^nd time the bulls tried to do it, they got exhausted. Currently the chart is showing a nice upward trend. He likes energy. If this breaks above $51, he would be keen to add.

You can expect resistance on this at around $42. It is now at $38, so it is reaching a Sell target zone. If there is any further rally, he would Sell.

With refiners, from late summer to end of Sept, this sector goes through a process. They shut down refineries and move into producing heating oil. Mid July until end of Sept is seasonal strength. Watch inventories of gas and heating oil.