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Murphy USA: A Solid Buy Amid Market Volatility

Market sell-offs can be unpleasant, but investors find opportunities. Murphy USA's stock has dropped 22%, creating potential for growth due to its increasing market share, robust operations, and a growing dividend. Investors should consider adding it to their portfolios.

Date: 
AI Rating:   7

Market Sell-Off Effects

The report discusses how Murphy USA (NYSE: MUSA) is experiencing a notable stock decline of 22%, which is significantly higher than the S&P 500's 8% drop. This decline presents an opportunity for investors interested in stocks that may be undervalued due to market volatility.

Free Cash Flow (FCF)

Murphy USA has quadrupled its total free cash flow over the last decade, while free cash flow per share has increased tenfold. This substantial growth in free cash flow suggests that the company has been effectively leveraging its resources, providing confidence to investors regarding its ability to generate cash and support shareholder returns.

Dividend Growth

The company has increased its dividends for 12 consecutive quarters, almost doubling the payments since 2021. The significant growth in dividends, while using only 9% of the FCF, indicates that Murphy USA maintains a strong allocation of cash flow towards returning value to shareholders.

Gross Profit Margins

Murphy's gross profit margins have improved from 5% in 2013 to 11% currently, illustrating better operational efficiency and profitability. This improvement suggests that the company is managing costs effectively while also providing competitive pricing.

Conclusion

Overall, Murphy USA's solid operational foundation, coupled with impressive growth in free cash flow and dividends, positions the company favorably even in a turbulent market. Investors may view this as a strong buying opportunity, especially given its significant pullback in stock price relative to its growth potential.

Stocks:  MUSA