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Here's Why You Should Sell Halliburton (HAL) Right Away

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Halliburton Company (HAL - Free Report) has lost 32.5% in the past year and the struggle is likely to continue as crude volatility has created an uncertainty for oilfield service businesses.

The one-year pricing chart shows that Halliburton has underperformed the Zacks Oil & Gas Field Services industry, which has lost around 14.4%. Moreover, the Zacks Consensus Estimate for 2019 earnings per share has been revised downward to $1.47 from $1.87 over the past 30 days.

Following negative earnings estimate revision, the Houston, TX-based company currently carries a Zacks Rank #5 (Strong Sell).

Factors Dragging the Stock Down

Despite posting higher-than-expected results in the fourth quarter, Halliburton’s quarterly earnings per share and revenues fell year over year. This was owing to the slowdown in the North American completion services demand that led to pricing pressure in the hydraulic fracturing business. In other words, the pipeline bottleneck problem in the prolific U.S. shale plays and the plunging crude prices through the December quarter of 2018 lowered demand for oilfield services, affecting Halliburton’s year-over-year results.

There are major headwinds confronting Halliburton as volatility in oil prices will continue to affect the energy market through first-half 2019. The company expects crude volatility to affect its customers’ budget as well.

Halliburton added that many of its customers fixed their 2018 capital budget by assuming oil at $50 per barrel. Hence, considering the current commodity pricing scenario, the customers’ capital spending through 2019 is likely to remain flat, believes Halliburton. The oilfield service giant also said that its customers, with constrained reach to the capital market, may lower capital budget in 2019 if crude volatility persists.

Hence, conservative capital spending by explorers and producers can keep oilfield service demand weak in 2019. Thus 2019 is unlikely to be an outstanding year for oilfield service giants like Schlumberger Limited (SLB - Free Report) , Halliburton and Baker Hughes, a GE company .

Stocks to Consider

Not all the stocks in the energy space are having a tough time. Investors can choose an energy stock like Sunoco LP (SUN - Free Report) , with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Sunoco LP has average positive earnings surprise of 18.4% for the trailing four quarters.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

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In-Depth Zacks Research for the Tickers Above

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Sunoco LP (SUN) - free report >>

Schlumberger Limited (SLB) - free report >>

Halliburton Company (HAL) - free report >>