Halliburton could benefit from the cheapest hydraulic fracturing in years
The hard time of energy might not last long.
The best performing sector of the year – the worst performing last month – is expected to retain the top spot as investors realize the extent of the imbalance between energy supply and demand, said Boris Schlossberg of BK Asset Management at CNBC’s “Trading Nation” Thursday.
Although concerns over the delta variant of Covid-19 have limited the gains, “once that is gone, you will still have resurgent demand with a very limited supply,” said the chief executive of foreign exchange strategy. company.
His first choice in the space was oil services company Halliburton, which he was long via the $ 19 to $ 22 purchase gap expiring in November. The stock started trading up nearly 2.5% to $ 19.91 on Friday.
“Even though it is a hydraulic fracturing company in a lot of ways, hydraulic fracturing at these oil price points is the cheapest since 2017, so I think it will work really well,” he said. he declared.
The company is also using artificial intelligence and cloud computing to streamline its processes and make them leaner, another benefit for investors, Schlossberg said.
“All of this is going to translate into much better margins and profits for the company as we go along, especially if oil just stays at these levels,” he said. “He doesn’t even have to rally around. As long as he’s 65 through the end of the year, I think we’re going to look very golden with Halliburton.”
West Texas Intermediate crude oil prices edged up to around $ 69.63 on Friday.
It may help to be more cautious about energy stocks, TradingAnalysis.com founder Todd Gordon said in the same interview.
“XLE is starting to lose favor with the S&P as a benchmark,” he said, referring to the Energy Select Sector SPDR fund.
“We’re definitely going to need the energy, but in terms of the portfolio I would say no,” Gordon said.
For those who must be on display, Gordon recommended exploration and production inventories over pieces of equipment and service.
“Exploration and production is the industry to watch in energy, and if you want a name try a name like Devon,” he said.
With a dividend yield of 1.7% and several gains behind, Devon offers stability on a fundamental basis and a potential technical breakthrough opportunity, Gordon said.
“If we can get to around $ 32, we’ve broken technical resistance,” he said. “Maybe there’s a race if you want energy exposure.”
Devon started trading on Friday up nearly 3% to $ 27.41.