SLB Schlumberger Ltd

Shares of Halliburton Co. (HAL) are currently trading close to its 52-week high of $51.45. The second-largest member of the oilfield services contingent behind Schlumberger Ltd. (SLB) has seen its share price climb approximately 25% since the beginning of the year, as investors have been buying the stock for its attractive fundamentals and positive outlook. The recent optimism about economic recovery has added to this bullish sentiment.

We like Halliburton’s leading position in the global oilfield services market. We also appreciate its broad and technologically-complex product/service offerings as well as its very strong relationships with both publicly-traded and national oil companies worldwide. The company has been benefiting from increased activity in the unconventional oil and gas shale plays in North America, which have more than made up for the drop in deepwater Gulf of Mexico (“GoM”) activity and disruptions in North Africa.

As reinforced by results from the last few quarters, the all-important North American activity levels (to which Halliburton is heavily exposed through its market-share-leading pressure-pumping business) are showing signs of strength and sustainability. Margins in most basins now appear to be rapidly gaining steam, as the industry looks to balance supply growth with recovering hydrocarbon demand.

Additionally, Halliburton remains in excellent financial health with about $1.0 billion in cash and a debt-to-capitalization ratio of around 26%. This helps Halliburton to capitalize on investment opportunities and offers options to make strategic acquisitions, thereby further improving growth visibility.

As such, we believe the company is favorably positioned to continue accelerating revenue and earnings growth over the next few quarters. Halliburton currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

Houston, Texas-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sectors. The company operates under two main segments: Completion and Production, and Drilling and Evaluation.

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