Tuesday, February 28, 2012

"Back to the Oil patch to find more value and good fundamentals with Oil Services Company, Halliburton Co."

Dow Jones Industrial Average 13,005 (Up) - the close Tuesday , February, 28th

"Founded in 1919, Halliburton is one of the world's largest providers of products and services to the oil and gas industry. It employs nearly 70,000 people in approximately 80 countries.
Halliburton's fascinating and proud history reveals a continuous focus on innovation and expansion that began with the company's founder, Erle P. Halliburton. After borrowing a wagon, a team of mules and a pump, he built a wooden mixing box and started an oil well cementing business in Duncan, Oklahoma."  This is how it started according to Halliburton's website.

Halliburton Co. (Symbol HAL, $37.68) and other Oil Service stocks have been lagging the market recently despite the great rise in the price of West Texas Intermediate Crude ($106.60 per barrel). This despite having 25 Strong Buy recommendations from analyst and 9 Overweight ratings. Halliburton is projected to earn $3.93 per share in 2012 and 2013 earnings are looking like $4.58 per share. This reflects a forward PE of 9.6 which is way below the market average. A couple reasons for this are the fact that earnings from gas drilling are expected to slow up a bit because of a supply glut and nowhere to store the surplus natural gas. Second, Halliburton's name has been mentioned in the big BP and TransOcean oil rig leak in the Gulf of Mexico, because they were the cementer.

But there is no denying the numbers. HAL, (like in 2001 a Space Odyssey), has a company Return on Equity of 25%. Also, although the one year total return on the stock is -19%, the three year Total return on the stock is actually 137.5 %. Ebitda continues to rise each quarter and Revenues have been on a steady quarterly rise. Plus one of these days they are going to let you do some offshore drilling off the coast of the USA. We better do it quick because the Chinese already have a rig in production off the coast of Cuba!  
 Halliburton states on their website that "As we work with our customers and suppliers to develop global energy resources, sustainability is an integral part of our business strategy and a key driver in all of our business activities. Our innovative technologies and our operational experience and expertise enable us to minimize our environmental impact and successfully manage the social challenges and inherent risk that are present in our industry."

So Freewilly says Drill, Drill, Drill and make some investment in the great stock value which is Halliburton"


1 comment:

  1. http://www.marketwatch.com/story/how-100-plus-oil-can-prime-your-portfolio-2012-03-16