Doing $100 on Schlumberger's Profit HiWAY

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NEW YORK ( TheStreet) -- Back in August, as shares of oil services giant Schlumberger  traded at around $81 per share, I didn't see anything that would prevent the stock from reaching $90. This is even though Schlumberger -- as with rivals Halliburton and Baker Hughes -- was being hurt by (among other things) weak oil prices and soft rig counts.

Today, shares of Schlumberger, which now trades at around $93, are up 15% since my $90 target. As I've written recently in my Halliburton article , which prompted an invitation to speak with Barry Armstrong of Boston's WRKO , it looks as if the entire oil services industry has finally reached bottom. But there are also indications that even at 15 times forward earnings, Schlumberger's stock may yet be cheap.

Unlike Halliburton, which generates 50% of its revenue in the U.S., Schlumberger enjoys a significant portion of its business from international markets. And this certainly proved an advantage this quarter as overall revenue grew 4% sequentially to $11.6 billion, with 7% growth coming in from North America, while international revenue grew 3%.

To the casual observer, these numbers may not impress, especially when compared to Halliburton's 13% international growth. But investors shouldn't discount the effect of the 60/40 OneSubsea joint venture, which Schlumberger owns with Cameron International

What this means is that, when including the OneSubsea business, Schlumberger's revenue growth would have been closer to 5%, which would have more than tripled Halliburton's revenue growth. What's more, it certainly seems as if Schlumberger has begun to differentiate itself from its peers -- particularly from the standpoint of innovation as it looks to increase oilfield productivity in North America.

As noted, Schlumberger has less North American exposure than both Halliburton and Baker Hughes. With the ongoing pricing weakness in the U.S., Schlumberger's market diversification has served as an advantage. That said, management doesn't expect the weakness in North America to continue beyond this quarter.

For now, the company is still working to further diversify its operation. One of the ways management has done this is by playing to its strengths and efficiency. For instance, even though the company did experience some operational delays in some international regions, it was encouraging that management was still able to expand margins by 134 basis points to reach 23%, which demonstrates Schlumberger's ability to make quick adjustments.

Given how well the company is performing in international markets, what this means is that North America is the only "real issue" holding back Schlumberger from dominating this industry. Management understands this. To that end, the company has increased its capital spending and has invested in research and development to uncover new drilling processes in North American markets -- whether unconventional or otherwise.