This is a solid way for more conservative investors to play the energy sector. Marathon Petroleum Corp. (NYSE: MPC) is one of the largest independent petroleum refining and marketing companies in the United States.
Until just recently, the company operated approximately 2,750 retail sites under the Marathon and Speedway brands. In addition, it operates a logistics network of pipelines, barges, trucks and terminals that store and transport crude and products.
Last August, the company announced it would sell Speedway to 7-11 in an all-cash deal valued at $21 billion, or $16.5 billion after-tax. The sale transforms the company’s balance sheet and creates options to revisit the corporate structure of MPLX. Many on Wall Street feel that with Speedway removed, the dislocation in refining value becomes even more transparent as the company trades much cheaper than its industry peers do.
The analysts said this at the time in reference to the Speedway sale:
The company has indicated that it will significantly strengthen its balance sheet with the cash and return excess capital to shareholders in the form of buybacks. While Exxon trades at a valuation premium to its sum-of-the-parts, we continue to highlight that Marathon Petroleum trades at a discount to its sum-of-the-parts valuation.
Shareholders receive a robust 5.61% dividend. The Goldman Sachs price target is $49, and the consensus target is lower at $46.27. Marathon Petroleum stock closed most recently at $41.36.
This consumer sector giant also makes good sense for conservative investors. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and grocery products.
Its primary brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.
Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.
Shareholders receive a 2.15% dividend. The $67 Goldman Sachs price target compares with the $61.37 consensus target. Mondelez stock closed at $58.47 per share.