In the first week of January, I spoke about how Marathon Petroleum (NYSE: MPC) is poised for a turnaround this year. Since then, its stock has soared 32%. Activist hedge fund JANA Partners bought a 5.5% stake last month. The potential of the newly spun-off refiner is finally being recognized by the market. Marathon's valuations looked so attractive that the stock soared, despite reporting a loss in the latest quarter. Was this justified, though?

A sneak peek
In the fourth quarter, Marathon's operating loss was $158 million, compared to a year-ago profit of $351 million. Refining margins fell, thanks to higher West Texas intermediate crude oil prices. As a result, the crack spread -- the difference between the cost of obtaining crude oil and the price of the refined products -- was lower than the previous quarters. In this period, the U.S. Gulf Coast crack spread for six barrels of crude (using the 6-3-2-1 formula) was just $1.36, while the corresponding value for the blended version was a lowly $1.07. But I'm not losing heart.

The good news, however, is this: For the month of January, the values have already shot up to $6.93 and $4.13, respectively. The Obama administration's blocking of TransCanada's Keystone XL pipeline project has worked to Marathon's advantage. Furthermore, the latest employment data provided by the Labor Department indicates the strongest job growth in the last nine months. This is indicative of an improving economy that saw WTI crude prices dropping below $97 per barrel. Looking ahead, this is where things look promising.

Solid outlook
I feel the reasons behind Marathon's promising outlook are similar to those of HollyFrontier's (NYSE: HFC). Taking advantage of lower WTI prices as compared to the light Louisiana sweet and the Brent benchmarks is what I'm placing my bets on. The WTI-Brent spread should play a significant role for at least the next six months.

Additionally, management is looking to make some strategic changes in its mid-steam category. CEO Gary Heminger hinted that the company's pipeline business might be spun off into a master limited partnership. The associated tax advantage and substantial dividend payout are too lucrative an opportunity to miss -- both from the company's as well as from shareholders' point of view.

Marathon has also initiated an $850 million accelerated share repurchase program at $42.5 apiece, which looks more like a shareholder confidence-building move. This doesn't exactly look cheap from the company's standpoint given that the current 52-week high of $47 isn't much above the repurchase value. In all likelihood, management just did not expect the stock price to shoot up in such a short period of time.

Foolish bottom line
All in all, Marathon's soaring stock price seems justified. Looking at all these prospects, I have a feeling the company is still undervalued. Once the Detroit Heavy Oil Upgrade Project is completed by the end of this year, things could look even better. Investors must dig deeper. To stay up to speed on the top news and analysis on Marathon Petroleum, you can start here by adding it to your watchlist.