Does Halliburton Support These Prices?

With shares of Halliburton (NYSE:HAL) trading around $42, is HAL an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

Halliburton is a global oilfield services company that provides products and services to the energy industry related to the exploration, development, and production of oil and natural gas. The company operates in a sector that continues to see growth due to consistent world development. Halliburton is at the forefront of world expansion so look for profits in this company to continue to rise.

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T = Technicals on the Stock Chart are Strong

Halliburton stock is trading near the top of a multi-year range. The stock has seen higher highs and higher lows since 2008. Look for this pattern to remain in tact as the stock works its way back to all-time highs. One thing to note is that the all-time high levels have been significant selling zones in the last two occasions that they were tackled…

Evaluating a price trend can be efficiently done with the use of key moving averages. Key simple moving averages can provide insight into the trend and strength of the trend. What are the key moving averages? The 50-day, 100-day, and 200-day simple moving averages. Halliburton is trading above all of its rising key simple moving averages. It’s also above a short-term 20-day simple moving average which is an added bonus. These key averages are signaling a strong uptrend in Halliburton stock.

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Taking a look at the implied volatility and implied volatility skew levels of Halliburton options may help determine if investors are bullish, neutral, or bearish. The implied volatility of Halliburton options is at 24.43 percent today which coincides with a 3rd percentile over the last 30 trading days and 9th percentile over the last 90 trading days. What does this mean? This means that investors or traders are buying an extremely small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

The implied volatility skew of April and May put and call options is at about average. So as of today, there is an average demand from call and put buyers or average supply of call and put sellers, all neutral over the next two months. Investors are buying a minimal amount of call and put option contracts and are leaning neutral over the next two months.

E = Earnings Are Mixed Quarter-Over-Quarter

Halliburton should be seeing increasing earnings and revenue growth rates if the stock is to rise. What do the last four quarterly earnings and revenue growth figures for Halliburton look like? The last four quarterly earnings growth (Y-O-Y) rates have been: -26.53, -12.16, -1.25, and 21.43 percent while the last four revenue growth (Y-O-Y) rates have all been: 3.2, 8.6, 21.89, and 30.03 percent. Over the last four quarters, earnings and revenue growth has slowed for Halliburton.

How did the markets feel about these numbers? The last four quarterly earnings announcement reactions help gauge investor sentiment on Halliburton’s stock. The last four quarters have seen next trading session returns of 5.05, 2.19, 2.37, and 4.61 percent. The markets have been excited about Halliburton’s earnings and revenue prospects.

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E = Excellent Relative Performance Versus Peers and Sector

How has Halliburton stock done relative to its peers and sector? Year-to-date, the stock is returning 19.11 percent while its competitors, Schlumberger (NYSE:SLB), Baker Hughes (NYSE:BHI), Weatherford International (NYSE:WFT), and sector are returning 10.27, 12.08, 6.47, and 9.76 percent respectively. Halliburton has led the pack in year-to-date performance.

Conclusion

Halliburton is involved in a field that is mandatory for world development. Earnings and revenue growth rates have pleased investors. The has been seeing positive price momentum and may be ready to head towards all-time highs. Relative to its peers and sector, it has dominated the competition. Look for Halliburton to OUTPERFORM.

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