Seeking Alpha
Long only, contrarian, special situations, value
Profile| Send Message|
( followers)  

It has been a great start to the week for a couple of positions in my portfolio. Power - One (NASDAQ:PWER) which I own and profiled again Sunday at $4 a share, just received a buyout offer from ABB that values the firm at $6.35, a huge premium. Next came earnings from Halliburton (NYSE:HAL), a core oil services pick on the growth side of my holdings. The giant energy services company blew away expectations and is heading higher from here.

Positives from Halliburton's earnings report:

  • Adjusted earnings of 67 cents a share, beating estimates by 10 cents a share.
  • Revenue came in at $6.97B, $80mm over the consensus.
  • The company reported a 400bps sequential rise in North American margins.

6 additional reasons to own HAL at $38 a share:

  1. Included in the earnings report was $1B charge to cover the projected settlement for the gulf oil spill of 2010. The company is in court facilitated talks to settle the claims. Finalizing these claims should remove an overhang from the stock.
  2. Natural gas prices continue to rise and have more than doubled since the lows around this time last year. This should be good for demand for land drilling services and continue to help Halliburton improve its North American margins and revenues.
  3. The stock is cheap at just 9.5x next fiscal year's projected earnings.
  4. HAL sports a five year projected PEG of under 1 (.73) and is expected to get revenue growth back to 10% in FY2014 after expected 4% sales increases this fiscal year.
  5. This is the fourth time in five quarters the company has beat quarterly earnings estimates. I would expect consensus earnings estimates for FY2013 and FY2014 to be taken up in the next few weeks as analysts factor in these latest results.
  6. The 27 analysts that cover the shares have a median price target of $49 a share on HAL.
Source: Halliburton Crushes Expectations And Is Moving Higher