Halliburton Co. It reported better-than-expected earnings this week, helped by unexpectedly strong results from its North American unit, which offset flat or declining revenue elsewhere. The 2024 guidance that the company reported on the call was ultimately consistent with the view that slower investments in North America would result in flat revenues, but on a more positive note, the company indicated that the international business could see modest growth toward the end. years. Strengths and weaknesses in individual business segments and geographic risks offset each other, particularly for mature businesses such as oil services, suggesting that the range-bound price action experienced by Halliburton shares over the past two years is likely to continue. Stock prices range from about $23 to $43. Currently, the company trades at about 12x earnings, which looks cheap compared to the S&P 500, but is roughly consistent with the company’s recent historical merits, the aforementioned geographic risk concentration and the relative “cheap” nature of the business, which is expected to be cyclical at around $2.4 billion in 2024. Halliburton has a strong cash position with free cash flow and would make an attractive candidate option for selling cash-covered puts to those who do not own the stock or to those who sell covered calls. Mature investment-grade companies with moderate P/E ratios are often the best candidates for rewrites because they are less likely to experience rapid growth due to unexpected growth or sudden business losses. So if you own Halliburton stock, consider writing a bullish forecast, especially now that the company has released earnings. The $41 strike call on May 24 would yield about 40 cents in four weeks, or about 1% of the current share price, while still offering the potential for capital appreciation of more than 7%. Don’t own shares? One can sell cash-covered downside puts, collect a premium, and if the stock price falls, the worst-case scenario is that one buys the stock at a discount to the current share price. In this case, one might consider selling the May 24 put option at the $37 strike price, which would yield about 58 cents per share, giving a resting yield of about 1.5%. If the stock price falls, and the specified strike price is $36.42, you may consider selling the upside call option at this time. Disclosure: None The above is subject to our Terms and Privacy Policy. This content is for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect the unique personal circumstances of any individual. The above may not apply to your specific situation. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. Click here to view the full disclaimer.
