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Drilling services company and top oil stock Baker Hughes (BKR) moved above a fresh buy point Friday after trading tightly over the past few weeks. Tight trading, like that seen on BKR’s chart, can indicate strong demand and be a bullish indicator.
Shares of Baker Hughes have been holding support around their 200-day line over the past few months. The stock gained momentum in June and July, rising 16% and roughly 13%, respectively.
Energy stocks led the market in 2022 amid Russia’s Ukraine invasion, which had a huge effect on energy markets. But in 2023, most energy stocks and oil prices lagged as global markets returned to normal. However, over the past six weeks, oil prices rallied and moved above the psychologically important level at $80 a barrel. On Friday, West Texas Intermediate futures traded about $85 a barrel, hitting a 2023 high.
This has helped many oil stocks, Baker Hughes included. Shares of BKR rallied around 2% on Friday, punching above a recent four-weeks-tight buy point at 36.48. The stock also moved above an early entry at 35.62 this week.
Oil Stock Baker Hughes Shows Accelerating EPS, Sales Growth
The Houston-based firm provides drilling services and equipment for oil and natural gas producers. Baker Hughes also provides services to liquid natural gas producers through its fast-growing industrial and energy technology segment. Oil field equipment and services account for about 60% of sales.
Over the past three quarters, Baker Hughes has churned out accelerating year-over-year EPS growth of 52%, 87% and 255%. Meanwhile, sales growth accelerated from 8% to 18% to 25% over that same time period.
Baker Hughes annual earnings surged 2,066% in 2021 and jumped another 41% in 2022. This year, Baker Hughes’ EPS is expected to grow 68% to $1.54 a share, per FactSet estimates.
The firm maintains a constructive outlook for global spending for the rest of the year, and expects any softness in North America to be “more than offset” by strength in its international and offshore markets.
According to IBD Stock Checkup, BKR stock ranks No. 2 in the oil and gas machinery and equipment industry group, making it a top oil stock to watch. The group itself ranks No. 30 out of IBD’s 197 groups.
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