Summary
- Halliburton recently hit a near ten-year low.
- We are always on the lookout for both short term gains and those names setting up a potential long-term entry point into a quality equity primed for a bounce.
- Energy prices led to immense pressure on the firm but recent results suggest the name is a buy here at $22.
- This idea was discussed in more depth with members of my private investing community, BAD BEAT Investing. Get started today »
We are always on the lookout for names that are simply beaten down too far. Our investing philosophy has us seek out both short-term gains and those setting up a potential long-term holding in a quality equity. Over 6 months ago we made a quick trade in Halliburton (HAL), but it now appears to be setting up for an amazing long-term entry point, and we think our followers need to know about this stock as we just came back into the name here at $22. We believe oil is seeking equilibrium after tumbling hard to end 2018 and then trading with high volatility here in 2019. We believe performance of the name and the future outlook suggest the name is highly attractive here. Let us discuss.
The company just reported earnings, and we were are surprised at the response from the Street to a top-line miss and a bottom line beat. While it doesn't help that crude oil has been all over the map of late, the quarter was better than expected. This was in part driven by stellar demand, as well as cost cutting by the firm. Make no mistake, we think that the decline in HAL shares to give us this opportunity was mostly driven by oil prices as well as concerns over earnings which were clearly set to fall from years past. That said, we see better days ahead.
Halliburton stock has rebounded to the $22 level here and looks to move higher. As traders we want to ride this wave higher, but looking at the name from a longer-term perspective, that stock looks set to move higher, provided oil prices stay at these moderated levels or higher. The long-term chart also suggests that the name is a buy:
Source: Graphics by BAD BEAT Investing Chartist
As you can see in the current decade's chart, the stock has given up tremendous gains, then rebounded, then fallen again with oil cycles. We are emerging from a downturn in oil, and think that shares at $22 are worth considering. Right now this could be the best play in the space. Without question, you will profit in the long-term, unless you are so bearish on oil you see it trading at $30 for years to come, bankrupting the company. We see a bounce toward $30 line as highly likely and investors should be looking to establish a position now especially if oil stays in the high $50 range or better. We think a rebound toward $40 long-term is likely based on the chart. That said, let's talk more about the fundamentals.
