Buying Baker Hughes Before $75 and Beyond

NEW YORK (TheStreet) -- Although Halliburton (HAL) and Schlumberger (SLB) continue to capture the lion's share of coverage within the oilfield services sector, Baker Hughes (BHI) demonstrates why savvy investors see a three-team race.

Last week, Baker Hughes posted a 23% jump in quarterly profit, helped by improved margins at its North American operations. The company posted first-quarter net income of $328 million, or 74 cents per share on revenue of $5.73 billion. Net income grew more than 22% year over year, while revenue surged 10%.

So despite concerns about weak oil prices and soft rig counts, the company enjoyed an average of 6% year-over-year growth in revenue in the last four quarters. And this is while the company has been profitable for eight consecutive quarters.

Investors had other concerns about Baker Hughes' capital deficits, or the fact that the company is not as deep-pocketed as its rivals. But with adjusted net income arriving at 84 cents, exceeding estimates, none of this mattered during the call.

With the entire sector's numbers, including market leaders Schlumberger and Halliburton, posting better-than-expected first-quarter earnings results, there's no denying that this industry is on the rebound. Given that Baker Hughes' is benefiting from improved business conditions in North America (where revenue rose to $2.78 billion), investors have even more reason to be optimistic.

Likewise, North American margins improved by 200 basis points on an adjusted basis. This is despite a drop in well count, which management said was caused by severe winter weather in the Rockies and northeast United States. Baker Hughes' Latin America revenue fell 10% to $530 million.

If you liked this article you might like

Irma and Harvey Busted Algos; Probably Done Deals Under Trump: Best of Cramer

Dow, S&P 500 Set New Records as Fed Moves to Unwind Balance Sheet

Stocks In Negative Territory as Chances for December Hike Surge

Energy Stocks Lead a Neutral Market Even After Oil Inventories Spike

Cramer: Under Trump, These Are Probably Done Deals