With the price of oil having dropped to levels not seen since the depths of the financial crisis, many still remain concerned about the sector’s medium-term outlook, asserts value investor Matthew Castel, portfolio manager at Logos LP.

One group that has remained a solid performer relative to the rest of the energy complex are US refiners.

One standout growth opportunity within this group for 2016 is Marathon Petroleum (MPC), my Top Pick for growth investors in 2016.

This American petroleum refiner, marketing, and transportation company looks poised to continue to grind higher, benefitting from continued strength in gasoline demand.

Marathon’s existing refining asset base with a great blend of Midwest and Gulf Coast properties is in an excellent position to react to changes in the domestic crude market as refining margins have been enhanced as well as capacity to export distillate.

The company has successfully executed various mergers expanding earnings and has focused on organic growth to diversify away from the volatile refining business. 

Both the value of MPC’s retail segment Speedway (growing at 100% in 2015) and its MPLX acquisition do not seem to be baked into its share price and represent potential upside catalysts.

Finally, MPC exhibits impressive financial strength with its ROIC far outpacing its weighted average cost of capital in addition to return on equity and return on assets metrics leading the global oil and gas refining industry.

In addition, management has done an impressive job of rewarding shareholders with industry leading 3-year dividend growth and share buyback rates. 

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