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Halliburton's Making Its Way to $50

Stocks in this article: HAL SLB BHI

NEW YORK ( TheStreet) -- When compared to rivals Baker Hughes (BHI) and Schlumberger (SLB), I've never believed that shares of Halliburton (HAL) presented any immediate value -- not when the stock traded at a price-to-earnings ratio that is 5 points higher than Schlumberger, which is considered the best of bunch.

Even so, that's never stopped me from making comparisons as to whether or not Halliburton could one day supplant Schlumberger as the market's leader.

Though Schlumberger has always enjoyed more press coverage, Halliburton has never been too far behind. Following the company's recent, better-than-expected earnings report, I believe Halliburton is now in one of the best positions it has ever been, given how well management is performing internationally. Now that there are clear signs that sluggish rig counts have finally bottomed, shares of Halliburton, which have already gained 32% on the year, may yet be cheap.

Investors in this sector understand how brutal the industry has been. So it came as no surprise that Halliburton managed 1% year-over-year revenue growth in the quarter. But unlike most sectors, the year-over-year comparisons very rarely ever matter. Always looking for signs of improvement, analysts make their assessments by focusing more on the quarter-over-quarter basis. To that end, Halliburton was more "energized" as revenue grew by more than 5% since the April quarter.

As with Schlumberger and Baker Hughes, weakness in North America has been tough to overcome. But Halliburton managed to grow revenue 3% sequentially, which was consistent with the performances of both Schlumberger and Baker Hughes. But unlike both rivals, Halliburton showed plenty of strength in international markets, growing 14% year over year and 8% sequentially.

I don't want to exaggerate Halliburton's international performance. Schlumberger, which posted 10% year-over-year growth in international markets, was no slouch either. But in Halliburton's case, the company is only a couple of quarters removed from posting a 5% year-over-year decline in its international business.

What this means is that management's new focus on international markets is working well -- remarkably, much quicker than even the company expected. In that regard I don't think it's wrong to speculate that Halliburton is, in fact, gaining share on Schlumberger internationally. Plus, given that Halliburton has more exposure in North America than both Baker Hughes and Schlumberger, Halliburton has now developed a solid international revenue base to help offset North American weakness.

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