Shares of Halliburton Co. (HAL) hit a 52-week high of $47.66 on Aug 20. In fact, the Houston, TX-based oilfield services behemoth has seen its stock price climb some 33% since the beginning of the year. This price appreciation can be attributed to consistency in its earnings/cash flows and attractive fundamentals
Why the Bullishness?
Halliburton is among the top three players in each of its product/service categories, and is present in all major hydrocarbon-producing regions of the world. The company, which has surpassed earnings estimates five times in the last 6 quarters, enjoys very strong relationships with both publicly-traded and national oil companies worldwide.
Halliburton’s international operations continue to reflect strong demand for its services on the back of higher activity. This is expected to be a key growth driver going forward with pricing in the region remaining competitive. We have identified Latin America – offering enough shale development opportunities – as the important market in this regard.
Additionally, the world's second-largest oilfield services firm after Schlumberger Ltd. (SLB) remains in excellent financial health with some $1.4 billion in cash and a debt-to-capitalization ratio of around 24%. This helps Halliburton to capitalize on investment opportunities and offers options to make strategic acquisitions, thereby further improving growth visibility.
Finally, Halliburton’s recent announcement of a $5 billion share buyback program, together with the 39% increase in its quarterly dividend (declared in Apr) are other pieces of positive news. These actions not only highlight Halliburton’s commitment to create value for shareholders but also underline the energy equipment supplier’s healthy financial condition and confidence in its business going forward.
Zacks Rank & Stock Picks
With Halliburton shares trading at 52-week high, any upside from here may be limited. Meanwhile one can look at Dril-Quip Inc. (DRQ) and SEACOR Holdings Inc. (CKH) as attractive investments. These energy equipment suppliers – sporting a Zacks Rank #1 (Strong Buy) – offer value and are worth accumulating at current levels.
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