We recently compiled a list of the 10 Oversold Large Cap Stocks To Buy Now. In this article, we are going to take a look at where Halliburton Company (NYSE:HAL) stands against the other oversold large cap stocks.
The Fed recently reduced the funds rate by 50 basis points, a decision seen as daring by some analysts, though it has been largely embraced by the market and many experts. The market seems to be on an upward trajectory since the day of rate cuts as the S&P gained over 4.3% on October 14 and closed at another all-time high.
While there are some concerns, experts are quite optimistic that they won’t be of much significance as we discussed in our article about best-performing long-term stocks in 2024. Here is an excerpt from the article:
“Dominic Chu of CNBC expressed concerns about potential market overconfidence, given the calmness amid geopolitical risks, the upcoming U.S. presidential election, and consumer spending challenges. [Gunjan] Banerji acknowledged these risks but emphasized that much of the market’s optimism is tied to the Fed’s actions, with people reassured by the larger-than-expected rate cut.
Finally, Banerji pointed out a broadening of the market rally beyond the tech sector and mentioned the strong performances in sectors like energy and materials, and record highs from companies like Caterpillar and McDonald’s, which indicates a healthier, more diverse market rally.”
The Path Forward for Equities and AI
Noah Blackstein, Senior Portfolio Manager at Dynamic Funds recently joined CNBC’s ‘Squawk Box’ and showed optimism around the equity markets. He suggested that current highs may continue. He expects the Fed will implement two more rate cuts this year, which would help sustain market momentum. Despite some geopolitical uncertainties and election concerns, the broader expectation in the market since July, along with favorable banking and credit indicators, supports his positive outlook.
Blackstein believes the labor market’s strength may be overstated and noted that revisions to employment data are likely due to a low participation rate in recent surveys. He also argued that real interest rates are historically high and tight, which further suggests the need for more cuts.
Regarding the economy, Blackstein expects further rate reductions to avoid potential market volatility, especially in light of recent hurricane impacts on employment and retail sales. He highlighted that while real interest rates may seem moderate when compared to the last 20 years, they are still elevated in historical terms.
As the Fed steers the economy away from a potential recession, Blackstein views the next phase as an opportunity for long-term growth, especially in areas like family housing and AI. He believes AI will drive a productivity revolution and integrate data strategies into several sectors, which will ultimately lead to cost savings and revenue growth for corporations.
Our Methodology
To list 10 oversold large-cap stocks, we used a Finviz screener to extract stocks that have fallen significantly on a YTD basis and have a forward P/E ratio between 5x to 15x. After getting a list of 20 stocks, we narrowed it to the most widely held by institutional investors. Finally, the stocks were ranked in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s Q2 database of 912 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A drilling rig in the desert with an orange sunset in the background.
Halliburton Company (NYSE:HAL)
Market Cap: $25.55 billion
FWD PE Ratio: 9.31
YTD Share Price Decline: ~20%
Number of Hedge Fund Holders: 41
Halliburton Company (NYSE:HAL) provides products and services to the energy industry and operates in over 70 countries. It was founded in 1919 and since then, it has grown to become one of the largest oilfield services providers globally.
It offers a range of services, from energy exploration and drilling to reservoir management and production optimization. It is renowned for its technological advancements in hydraulic fracturing (fracking) and energy solutions and plays a significant role in major global oil and gas operations.
Halliburton (NYSE:HAL) is quite favored by analysts as it has been covered by 31 analysts with an average price target of $40. The price target represents an upside of approximately 38.5% from current levels on October 17.
On September 26, TipRanks reported that analyst Pei Hwa Ho from DBS maintained a Buy rating on Halliburton (NYSE:HAL) with a price target of $45.00. The price target is based on the company’s focus on digital technologies and automation, which have improved service efficiency, reduced costs, and lowered its carbon footprint. Innovations like the iCruise system and Zeus Electric Fracturing System have improved the company’s operational and financial performance and have positioned it ahead of competitors.
Collaborations with Wintershall Dea and AIQ further show the company’s commitment to technological leadership.
Moreover, Halliburton’s (NYSE:HAL) strategy of returning over 50% of free cash flow to shareholders, along with the stock’s attractive valuation after recent price declines, also contributed to the recommendation.
Overall HAL ranks 4th on our list of the oversold large cap stocks to buy. While we acknowledge the potential of HAL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.