Cramer gave a quick shout out on Halliburton this morning on his "Mad Dash" before the bell. He cited Lloyd Blankfein's op-ed in the Wall Street Journal today as a possible catalyst as it highlighted energy as one of key drivers of his plan for an American Revival. This reminded me that Halliburton has been caught up in the overall sell-off which has really hit energy shares hard and that the shares are back down to a range that I have traded the shares profitably several times over the last few years.
Halliburton Company (NYSE:HAL) is one of the largest oil service firms in the world and provides various products and services to the energy industry for exploring, developing, and producing oil and natural gas.
6 reasons HAL is undervalued at $30 a share:
- The 25 analysts that cover the stock have a median price target of $42 a share on HAL, some 40% above the current stock price. Credit Suisse has an "outperform" rating and a $44 price target on Halliburton.
- The company has met or beat earnings estimates for six straight quarters and the stock sells for less than 10x forward earnings, a discount to its five year average (14.2).
- HAL is selling near the bottom of its five year valuation based on its five year valuation range based on P/E, P/CF, P/B and P/S.
- The company has grown operating cash flow (OCF) by over 50% in the last three years and the stock sells at less than 9x OCF.
- The company has an A rated balance sheet and the stock has a cheap five year projected PEG (.60). Longer term the company should benefit greatly from its first mover advantage in Iraq which is sharply ramping up production.
- The stock is approaching solid long term technical support levels (See chart).