An Oil Stock with Strong Potential

Back in the January 16th 2015 Seasonal Forecaster newsletter (the introductory part of it was published here), I introduced a simple way to identify good candidates for stock trades – look for the ‘green' on Briefing.com's Earnings Archive, as well as strong Yr/Yr Revenue increases. The idea is to trade stocks that take off after strong earnings announcements. The example I used was from the night before, January 15th:

Now for the next day's newsletter I looked at the previous day's numbers on Briefing.com. Two companies that easily beat expectations, and had strong Yr/Yr Revenue growth, were Haliburton and Baker-Hughes, two oil services companies:

Wait, isn't everyone fleeing from oil-related stocks because the collapsing price of oil is killing all of these companies?

Certainly some oil producers, especially the high cost drillers, are getting hurt. But some service companies are still doing pretty well. It turns out that Haliburton has proposed a merger with Baker-Hughes. Jim Cramer thinks a lot of the potential combination, as he explains in Jim Cramer Explains Why The Halliburton-Baker Hughes Deal Looks Better Than Ever.

Haliburton (HAL) just-announced earnings were good. The earnings were 8.2% higher than expectations, and revenue was up 14.8% year-over-year. For all the cautions you hear about falling oil stock revenue, Haliburton held ground on both earnings and revenue:

Baker Hughes's earnings were 23% above expectations and revenue was up 3% above expectations.

Incidentally, HAL is trading at a P/E of 10, and BHI at 14 – quite low for their historical ranges. Seasonally, HAL has a strong record of institutional accumulation this time of year. It may be different this year because of the sharp drop in oil prices. But in the past, HAL has averaged a 14.4% gain over the next 15 weeks, with gains in 26 of the past 31 years (84%).

As I pointed out in Wednesday's newsletter, it appears HAL has found support around the 37 level:

So in Wednesday's newsletter I proposed a long stock trade for HAL. That trade is already up 1.5%. I also suggested a January 35 2016 LEAPS call as an alternative trade. That trade is up 4.2% in just 2 days.

With HAL closing above recent resistance yesterday, and the strong potential for the Haliburton/Baker Hughes partnership, these trades could generate very strong returns over the next several months. (At the time of writing, the author had no position in HAL, but may have by the time of publication).

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.

Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.

As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.

The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.

Related Posts

 

MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.