Halliburton: Expected to Impress
Halliburton has been one of our favorite picks since the beginning of 2011. It has impressed us along the way, and continues to do so. Currently, HAL is expected to pop, and analysts are eagerly awaiting. James Hartje has listed his top 10 reasons you should invest in HAL.
10 Reasons Halliburton is Bullish:
- PEG = 0.59. Halliburton holds a PEG ratio of 0.59, making it a bullish indicator as the lower the company’s PEG ratio, the more cheaply valued it is. Companies with PEG ratios under 1 are undervalued — another reason we believe Halliburton is a strong investment.
- P/S = 1.83. Halliburton holds a P/S ratio of 1.83, a good valuation and strong indicator. Value investors look for P/S ratios under 2 as they show great opportunity. Another thing to consider is the fact that low P/S Ratios and rising stock prices tend to be a good basis to invest in growth stocks that have suffered a setback, something that definitely suits Halliburton, as it has been unfairly hit with share prices falling as much as 30% over the past few months as many investors correlating the fall in the price of crude oil and Halliburton’s share price too much. Over the course of the past decade, Halliburton’s P/S ratio has been below-average, making it a good indicator of value.
- ROE = 20.7%. Halliburton’s return on equity averaged out over the past three years is 20.7% (22.49% in 2011), a strong indicator going forward, especially considering the fact that Halliburton plans to grow and further reinvest money within.
- ROA = 12.55%. Equally impressive, Halliburton continues to show effective upper-level management with strong return on both assets and equity.
- Forward P/E = 9.5. Halliburton sports a cheapish forward P/E of 9.5. That represents a discount to rivals like Baker Hughes (BHI) (10.1), National Oilwell (NOV) (11.5), and Schlumberger (SLB) (14.0).
- 92% analyst buy rating. Halliburton is highly regarded among Wall Street analysts, with 95% projecting the stock to outperform the S&P 500 going forward.
- 82.50% held by institutions. Halliburton is held by forty-two hedge funds. HAL represents 4% of T. Boone Pickens BP Capital’s portfolio’ Ken Griffin’s Citadel holds more than 2 million shares; Ken Heebner holds a $170 million position; Jim Cramer holds it in his charitable trust.
- $5.9 billion total revenue. Net income for the 2nd quarter of 2011 was reported at $747 million, vs. $483 million in the 1st quarter prior year. Total revenue’s improved to $5.9 billion from $4.4 billion in the same quarter last year. Operating income increased to $1.2 billion from $762 million in the June quarter of 2010 on the improving pricing environment and higher equipment utilization.
- $1.4 billion cash balance. Halliburton currently is cash-flow-positive with a cash balance of $1.4 billion. Like we always say, “Cash is King!”
- Dividend yield = 0.9%. It’s not much, but something is better than nothing, and a near 1% dividend yield is not bad especially considering the fact that Halliburton is such a high-growth, speculative stock to begin with.
If these 10 reasons don’t persuade you to jump on Halliburton stock, I don’t know what will. We have been reporting updates on this stock for months, and are even more excited to see where it goes next. You should be too!
Quotes taken from report by James Hartje, Read the entire article here.
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