We recently compiled a list of the Jim Cramer on Tesla and Other Stocks. In this article, we are going to take a look at where Halliburton Company (NYSE:HAL) stands against the other stocks Jim Cramer is talking about.
Jim Cramer, host of Mad Money, emphasized the ongoing significance of fossil fuels in supporting technological advancements, even as investments in renewable energy continue to increase. He stated:
“This is not just a grudge match between the old and the new, a battle of electric vehicles versus internal combustion. The truth is, fossil fuels are essential for a lot more than vehicles, like it or not.”
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Cramer highlighted the growing energy demands of major tech companies, noting that the data centers they are constructing consume vast amounts of electricity. While these tech giants are making substantial investments in nuclear energy, he pointed out that this power source is unlikely to significantly impact data centers for at least another decade due to the complexities of building nuclear facilities and community resistance to having them nearby.
“If we need more energy, we’re going to get it from what comes out of the ground … fossil fuels that will power the data center, specifically natural gas… You may be reluctant to invest in it, you might think who cares, but you need to know how vital all of this fossil fuel technology is to the growth of the Magnificent Seven.”
Cramer also reflected on the shift in the U.S. energy landscape, recalling how the nation was once heavily reliant on OPEC for oil imports just two decades ago. Today, he pointed out, the U.S. produces over 13 million barrels per day, making it the largest oil producer globally and a net exporter. He mentioned the Permian Basin’s unexpected resilience, continually producing despite earlier predictions of depletion.
Cramer noted that the decline of OPEC has transformed the geopolitical landscape. He referenced the 1973 oil crisis, triggered by OPEC’s retaliation against U.S. support for Israel, which led to stagflation and economic turmoil. In contrast, he pointed out that despite Israel’s current conflict, the U.S. economy is not experiencing stagflation or recession, resulting instead in a bull market. He attributed this stability to the industry, saying:
“… This industry that spent billions upon billions of dollars to try to be as low carbon as possible is the reason why oil prices have actually come down during this period. They’ve gotten so much production that OPEC is now powerless.”
Turning his attention to the broader oil industry, Cramer explored the role of oil service companies that facilitate production, including offshore drillers. He recalled becoming optimistic about oil service stocks earlier in the year, anticipating higher energy prices but admitted that this expectation did not materialize due to economic concerns dampening oil and gas markets. Despite current investor reluctance toward oil service stocks, Cramer suggested that sentiment could shift over time, especially because of the Federal Reserve’s recent rate cutting.
“Now that the FED is our friend and more rate cuts are on the table, that’s good news for the industry. I am not worried about the election either. If Trump wins, maybe we’re back to that “drill baby drill” thing. If Harris wins, we get exactly what we’ve had the last four years. Not ideal for the industry but it’s still led to record oil and gas production here in the United States.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during his episodes of Mad Money on October 23 and 24. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 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)
Number of Hedge Fund Holders: 41
Cramer called Halliburton Company (NYSE:HAL) one of the “largest pure-play drillers” while mentioning that the stock has had a bad year and was down 20%. He further said:
“With Wall Street expecting nearly 9% earnings growth, Halliburton is even more of a bargain trading at eight times next year’s earnings estimates even though it’s also expected to put up 9% growth in 2025. However, those valuations are only attractive if SLB and Halliburton can make the numbers. Otherwise, their stocks’ going to stay in the doghouse.”
Cramer went on to say:
“Now, the other major oil service company, Halliburton reports in two weeks, November 7. This stock has lagged SLB this year because Hal’s more levered to the North American market rather than the international markets that are doing better. We’ll see what Hal has to say in a fortnight, but if the outlook that SLB just gave us is correct, low growth for international, no growth or declines from North America then Hal should be in worse shape than SLB. Even though Halliburton remains an excellent operator, it’s just the wrong business mix for the current environment.”
Halliburton (NYSE:HAL) is a major provider of products and services in the global energy sector, specializing in production enhancement, cementing solutions, and comprehensive drilling support. For the second quarter, the company reported total revenues of $5.8 billion, with an operating margin of 18%. During the earnings call, CEO Jeffrey Allen Miller expressed optimism about steady growth for the company throughout the remainder of 2024.
Management highlighted strong demand for the company’s services in international markets, noting high activity levels and equipment shortages across all major basins. The environment supports expectations of approximately 10% revenue growth for the international business for the full year.
However, the outlook for North America presents a different picture, as management anticipates a decline in revenues between 6% and 8% compared to the previous year due to reduced activity levels. Looking ahead to the third quarter, Halliburton’s (NYSE:HAL) Completion and Production division is expected to experience a sequential revenue decrease of 1% to 3%, with margins projected to drop by 75 to 125 basis points. In contrast, the Drilling and Evaluation division is forecasted to see a sequential revenue increase of 2% to 4%, accompanied by a rise in margins ranging from 25 to 75 basis points.
Overall HAL ranks 11th on our list of stocks Jim Cramer is talking about. 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.
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Disclosure: None. This article is originally published at Insider Monkey.