I have not penned anything around oil services giant Halliburton (NYSE:HAL) since earlier in the year. Given General Electric's (NYSE:GE) $3.3B buy out of oil services firm Lufkin Industries (NASDAQ:LUFK) yesterday, it feels like a good time to provide an update as the company has picked up some positives since we last looked at this cheap energy concern.
Recent positives for Halliburton:
- Jefferies just added the stock to its Conviction Buy List.
- TheStreet just reiterated its "Buy" rating on the stock late last week.
- Late in March, UBS upped its price target to $53 from $48 a share.
- Credit Suisse is convinced the U.S. rig count is going higher and listed Halliburton as a driller it likes here in Mid-March.
- Consensus earnings estimates for FY2013 have ticked up a few pennies a share since earlier in the year.
- Finally, the stock was upgraded to "Buy" in late January by both Global Hunter Securities and MLV & Co.
4 additional reasons HAL is value priced at $38 a share:
- The 27 analysts that cover the shares have a $48 a share price target on HAL.
- The stock should perform better in the second half of the year as the company is only expected to grow revenues at around 4% this year but at a little over 10% in FY2014. Over the past five years, the firm has grown revenues at a 11% CAGR. The stock sports a five year projected PEG of under 1 (.81) as well.
- The stock sells in the bottom third of its five year valuation range based on P/E, P/S, P/B and P/CF.
- The company has increased operating cash flow by some 60% over the last two completed fiscal years and the stock appears cheap at under 10x projected 2014's earnings.
Disclosure: I am long GE, HAL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.