Why Halliburton and Other Oil Stocks Rallied Today
Israel conducted a major strike on Iran's nuclear and military capabilities this morning.
Iran is a major oil and natural gas producer.
The threat to that supply sent oil prices higher, bolstering the growth case for Halliburton.
10 stocks we like better than Halliburton ›
Shares of oil and gas services firm Halliburton (NYSE: HAL) rallied as much as 4.7% on Friday, before settling into a 3.4% gain as of 12:30 p.m. ET.
Halliburton is the third-largest oilfield services company in the world, so any time oil prices go up, it's a recipe for potential further investment by oil companies in exploration, completion, and production enhancement services.
So, it's no surprise that Halliburton was rising when oil prices spiked on Friday, following Israel's strike on OPEC+ country Iran.
Last night and early this morning, Israel struck Iran's nuclear facilities and military complexes, along with targeted assassinations of top Iran Revolutionary Guard military officials and nuclear scientists.
While details are still becoming known, it's pretty clear the Israeli strikes have been very devastating for Iran. Of note, Iran is the fourth-largest oil producer in the OPEC+ cartel, and the world's third-largest producer of natural gas.
On Friday, oil prices were up 6.3% on the news of the strikes, even though a spokesperson for Iran said that the Israeli strikes hadn't targeted oil production facilities or refineries within the country -- only military and nuclear facilities. Nevertheless, the prospect of an escalating regional war in the oil-rich Middle East still led to a spike in oil prices today, which had fallen substantially to begin the year.
Amid the recent downturn in oil prices, Halliburton has delivered fairly lackluster results, with revenue down 6.7% in its recent quarter. That being said, Halliburton's stock valuation is also very low, at just 9.2 times trailing earnings and about 8.6 times this year's earnings estimates, with a dividend yield of 3.1%.
Like most oil stocks, Halliburton doesn't have great growth prospects, and is also cyclical. However, Halliburton and other oil stocks can effectively serve as a hedge against global wars that threaten oil supplies, as we're seeing today, while also paying a dividend along the way.
Before you buy stock in Halliburton, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Halliburton wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $888,780!*
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Halliburton and Other Oil Stocks Rallied Today was originally published by The Motley Fool
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