Thursday, June 23, 2005

Stock Pick Corner: Halliburton (HAL)

Halliburton hit a 52-week high today at $48.73. It is one of my stock picks for 2005, and I own shares in Halliburton. Regardless of your political beliefs Halliburton is the leader in enegery service companies. It still remains undervalued with all the other oil service stocks. It also has a contruction business that gets revenue from the US Military. They will soon sell off the KBR (Kellog Brown & Root Contruction Business) unit that is valued at an additional $3-4 per share. Halliburton is the best oil service company and if you listen to their latest conferance call, they are like the homebuilding stocks in a sense because of the baglog of orders from the major oil companies. Halliburton is still over 10 points off its all time in 1998 and the stock has been down since going to war in Iraq.

I am RAISING my price target for Halliburton to $57.00. Schlumberger (SLB), Halliburton's number one competitor is trading at 27 times 2005 earnings while Hal is trading at 21 times. Take 25 (conservative multiple) times $2.31 (2005 Earnings Estimate) = $57.75. Halliburton BEAT estimates by 63% ($0.72 vs. estimate of $0.44) last qtr and the stock did nothing. So, there is plenty of room for this stock to run.


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