Marathon Oil (MRO) Is Today's Water-Logged And Getting Wetter Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Marathon Oil ( MRO) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Marathon Oil as such a stock due to the following factors:

  • MRO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $178.0 million.
  • MRO has traded 4.0 million shares today.
  • MRO traded in a range 246.6% of the normal price range with a price range of $1.63.
  • MRO traded below its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on MRO:

Marathon Oil Corporation operates as an energy company worldwide. The company's North America Exploration and Production segment explores for, produces, and markets liquid hydrocarbons and natural gas in North America. The stock currently has a dividend yield of 2.2%. MRO has a PE ratio of 15.6. Currently there are 13 analysts that rate Marathon Oil a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Marathon Oil has been 5.7 million shares per day over the past 30 days. Marathon Oil has a market cap of $26.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.72 and a short float of 2.1% with 2.64 days to cover. Shares are up 11.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Marathon Oil as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 200.0% when compared to the same quarter one year prior, rising from $383.00 million to $1,149.00 million.
  • The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 61.01%. Regardless of MRO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRO's net profit margin of 34.09% significantly outperformed against the industry.
  • The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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