Investors who bought stocks during the COVID-19 market crash in 2020 have generally made some big gains over the past two years. But there’s no question that some big-name stocks have outperformed others since the pandemic bottomed out.
The bumpy road of the marathon: One company that has been a great investment over the past two years has been an oil producer Marathon Oil Corporation MRO.
Like many other companies, the COVID-19 pandemic has crushed Marathon’s business in 2020. Indeed, during the worst sell-off of the pandemic, WTI crude oil prices briefly fell below $0 as demand collapsed and oil buyers ran out of storage space.
At the start of 2020, Marathon shares were trading at $13.69. In early March, the stock fell to $8.45 as news of the spread of the coronavirus in China raised concerns about a US pandemic.
As the S&P 500 hit its pandemic bottom on March 23, Marathon stock fell to $3.31. Unfortunately, while the S&P 500 recovered from there, Marathon still hadn’t hit its crisis lows. In fact, Marathon fell to $3.02 on April 1, 2020 when oil investors saw the writing on the wall.
On April 20, WTI crude oil futures contracts fell below $0 a barrel for the first time in history, settling at an unprecedented price of negative $37.63. The May 2020 WTI contracts expired the next day and prices quickly bounced back into positive territory.
In early May, Marathon stocks were back above $5 and the Marathon rally started to gain momentum. By June 2020, Marathon had made it above $8 before the recovery ran out of steam. Marathon went as low as $3.73 in October before the stock got hot again.
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Marathon in 2022, beyond: WTI crude oil prices surged to new post-pandemic highs of over $65/barrel in March 2021, and shares of Marathon surpassed $10 in February 2021. Inflation, global energy shortages and the war in Ukraine pushed crude oil prices up to $130 in March 2022.
Inflation has weighed on many stocks, but it’s good news for energy stocks like Marathon. In its most recent quarter, Marathon reported revenue growth of 73% and net income of $966 million.
Marathon shares surged as high as $33.24 in May 2022 before falling oil prices temporarily halted the rally.
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Marathon shares are down to around $26.80 and WTI prices are down to $85.76, but inflation and energy shortages are dragging on.
Still, investors who bought Marathon stocks on the day they hit their 2020 pandemic low and held on have reaped some impressive returns at this point. In fact, $1,000 of Marathon stock purchased on March 23, 2020 would be worth about $8,484 today, assuming dividends are reinvested.
Looking ahead, analysts expect Marathon stock to continue rising over the next 12 months. The average target price among the 22 analysts covering the stock is $32.50, which suggests it is up 21.2% from current levels.