C. Kim Goodwin
Halliburton Co
HAL-N
TOP PICK
May 21, 2004
Has corrected because investors are concerned about auto production, but they have great diversification. Into high end entertainment systems. 15% revenue grower. 25% earnings grower.
The time to buy oil stocks was over a month ago, not now after the price of crude as surged. Where were these "buy" experts? He just sold some shares of HAL into strength to take profits.
They just topped EPS, but missed revenues, with US revenue falling sequentially. Guidance was positive with oilfield services to remain strong; their international business will drive growth (i.e. Middle East, Africa). They're also confident about their construction business.
Recently reported operating income was up 33%, despite their exit from Russia in 2022. Cash reserves are stable, while debt is retired and shares bought back. It trades at 13x earnings, 3.5x book (a little expensive), and supports a robust 30% ROE. Its dividend is backed by a payout ratio under 25% of cash flow. We recommend setting a stop-loss at $28, looking to achieve $47 -- upside potential of 28%. Yield 1.7%
With oil prices holding over $80 and global oil demand expected to hit all time highs this year, we reiterate this global energy giant. We like that quarterly cash reserves are growing, while debt is retired and shares bought back. It trades at 13x earnings and supports a 30% ROE. We recommend trailing up the stop (from $28) to $33, looking to achieve $47 — 21% upside potential. Yield 1.7%
We again reiterate this global oilfield service providers as a TOP PICK. Continued positive outlooks for oil prices will stimulate demand for their services, causing analysts to expect over 30% growth in cash flow. Quarterly cash reserves are growing again while debt is retired and shares bought back. It trades at 13x earnings and supports a 30% ROE. We recommend trailing up the stop (from $33) to $35 at this time, looking to achieve $47 -- upside potential over 20%. Yield 1.6%
Neither. Look at the 10-year charts, both lower today than 10 years ago. When flush with money, make acquisitions; then when things turn nasty, take write downs. Result is less than zero value creation for shareholders. The only people making money are the executives.
It reports Wednesday. SLB reported good numbers today, but that was more due to their overseas business. In contrast, HAL is more domestic, so HAL won't put up that surprise. He's bullish this name because Trump wants to drill for oil.
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