Shares of Halliburton Co. (HAL) are trading near their 52-week high of $43.96. In fact, the Houston, TX-based oilfield services behemoth has seen its stock price climb some 20% since the beginning of the year.
Despite this price appreciation, we remain optimistic on the firm’s near-term prospects, supported by consistency in its earnings/cash flows, attractive fundamentals and a positive outlook. These factors are reflected in Halliburton’s Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.
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 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.
Additionally, the world's second-largest oilfield services firm after Schlumberger Ltd. (SLB) remains in excellent financial health with some $2.5 billion in cash and a debt-to-capitalization ratio of around 23%. 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 39% increase in its quarterly dividend is another piece of positive news. We believe that the dividend hike not only highlights Halliburton’s commitment to create value for shareholders but also underlines the energy equipment supplier’s healthy financial condition and confidence in its business going forward.
Importantly, Halliburton has surpassed earnings estimates three times in the last four quarters. The Zacks Consensus Estimates for both 2013 and 2014 have also risen nicely over the last few months.
Other Stocks to Consider
In addition to Halliburton, there are certain other energy equipment suppliers like Exterran Holdings Inc. (EXH) and Willbros Group Inc. (WG) that offer even greater value and are worth buying now. Both these firms sport a Zacks Rank #1 (Strong Buy).
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