Trade-Ideas LLC identified Marathon Petroleum ( MPC) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Marathon Petroleum as such a stock due to the following factors:

  • MPC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $285.9 million.
  • MPC has traded 3.4 million shares today.
  • MPC is trading at 1.88 times the normal volume for the stock at this time of day.
  • MPC crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on MPC:

Marathon Petroleum Corporation, together with its subsidiaries, engages in refining, marketing, retailing, and transporting petroleum products primarily in the United States. It operates through three segments: Refining & Marketing, Speedway, and Pipeline Transportation. The stock currently has a dividend yield of 2.4%. MPC has a PE ratio of 9. Currently there are 9 analysts that rate Marathon Petroleum a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Marathon Petroleum has been 4.6 million shares per day over the past 30 days. Marathon has a market cap of $28.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.42 and a short float of 2.4% with 2.05 days to cover. Shares are up 16.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Marathon Petroleum as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and attractive valuation levels. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • MARATHON PETROLEUM CORP has improved earnings per share by 49.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, MARATHON PETROLEUM CORP increased its bottom line by earning $4.42 versus $3.31 in the prior year. This year, the market expects an improvement in earnings ($5.99 versus $4.42).
  • 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 41.1% when compared to the same quarter one year prior, rising from $672.00 million to $948.00 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARATHON PETROLEUM CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.

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