Plenty to Love With Halliburton

Tickers in this article: BHI HAL SLB

NEW YORK (TheStreet) -- With almost 40% stock gains in the trailing twelve months, Halliburton plays second fiddle to no one in the energy services space. Unless Schlumberger happens to be in the same room. Even then, the debate would be extremely close.

To that end, I believe high expectations for Halliburton continue to be what keeps the company "trailing" Schlumberger. It's always been perception. Halliburton's investors have enjoyed 38% stock gains in 2013 versus 22% for Schlumberger. They've been "disrespected" all the way to the bank. If recent moves by Halliburton's management serve as indictators, expect this race to get even closer.

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First and foremost, given the better-than-expected results we've seen from all of the oil majors in the October quarter, there are clear signs that business conditions in North America have drastically improved, a plus for Halliburton since that is where the company takes in 50% of its revenue.

The entire industry has already bottomed and the worst is over. In that regard, while management does deserve credit for having navigated the weak oil prices environment and soft rig counts, it no longer makes sense to appraise the company's performance on a quarter-by-quarter basis, not when upstream spending in the U.S. has just begun to pick up.

What I mean is that although the industry's turnaround is encouraging, investors would be doing themselves a disservice to not expect some volatility. And I would caution about having unrealistic near-term expectations about what Halliburton is able to do. The good news here is that Bakken, a low-permeability formation that contains the largest oil accumulation in the contiguous U.S., should help Halliburton's 2014 performance.