Locator: 50795INVESTING.
Two comments with regard to linked article below:
- except for Liberty Energy, did you really expect other names than the first four?
- the "stock tips" were not the most interesting thing about this story -- the most interesting thing about this story was the headline -- "a post-Hormuz world."
- suggesting that this may be the new normal -- "a post-Hormuz world," Iran controlling and perhaps monetizing the strait.
I've been saying the same thing for a couple of weeks:
Every day longer the strait is closed, it makes the Mideast that much less relevant.
Investing: five oilfield services stocks built for a post-Hormuz world. Link here. Michael Kern.
- SLB
- HAL
- BKR
- RIG
- Liberty Energy (LBRT)
Liberty Energy:
Every list like this needs a name that makes readers stop and say “wait, really?” Liberty is that name. It is small, it does one thing, and it has zero exposure to the Middle East and total exposure to the North American shale rebound that all four of the other companies on this list are counting on to varying degrees.
Q1 beat expectations quite convincingly. Revenue of $1.02 billion was up 4% year over year, EPS of $0.06 significantly exceeded a consensus that had modeled a loss of $0.13, and the stock jumped nearly 10% on the print.
The underlying margin picture is less tidy: EBITDA of $126 million was down 25% year over year, reflecting the pricing pressure that has been grinding through North American completions for the better part of three years.
CEO Ron Gusek’s answer to that pressure is technology. The company has built a software platform called StimCommander that automates rate and pressure control across its fleets in real time, and a cloud-based optimization system called Forge that aggregates performance data to continuously improve efficiency.
But.
If the Permian recovery stalls, or if prices fall faster than expected once the Hormuz situation eventually resolves, Liberty is where the pain shows up most visibly.
There is no international business to cushion the blow, no long-cycle backlog to fall back on. But that same concentration, which creates the downside risk, is exactly what makes the stock interesting if the early-innings thesis is right.
