Shares of Halliburton Company (HAL) hit a 52-week high of $67.35 on Jun 10, 2014. In fact, the Houston, TX-based oilfield services behemoth has seen its stock price climb some 34.2% year to date. This price appreciation can be attributed to its superior business model, attractive fundamentals and the ability to grow cash flow.
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 in each of the last 6 quarters, has tie-ups with both publicly traded and national oil companies worldwide.
Additionally, 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 a key market in this regard. Additionally, despite certain issues in Halliburton’s core U.S. segment, the long-term prospects for the business remain robust.
Moreover, Halliburton’s first-quarter earnings per share − from continuing operations – came at in at 73 cents, beating the Zacks Consensus Estimate of 71 cents and improving from the year-ago adjusted figure of 67 cents. The earnings strength can be attributed to improved stimulation work in the U.S. and increased profits from its pressure pumping business in Argentina.
Finally, last September, Halliburton was granted a reprieve from the United States Department of Justice, when it closed its investigation into the company’s role in the Gulf of Mexico’s Macondo well disaster. We believe that the judge’s acceptance of Halliburton’s guilty plea removes an overhang from the oilfield service provider’s future.
Zacks Rank & Stock Picks
With Halliburton shares trading at a 52-week high, any upside from here may be limited, as suggested by the company's Zacks Rank #3 (Hold).
Meanwhile, one can look at better-ranked players in the same industry like C&J Energy Services Inc. (CJES), Emerge Energy Services LP (EMES) and Basic Energy Services Inc. (BAS). C&J Energy Services and Emerge Energy Services sport a Zacks Rank #1 (Strong Buy) while Basic Energy Services carries Zacks Rank #2 (Buy).