HAL and HP have historically outperformed in the week following the last four presidential inaugurations
Halliburton Company (NYSE:HAL) and
Helmerich & Payne, Inc. (NYSE:HP) both belong to the oil services sector. And, based on our internal Sector Scorecard, despite cooling off lately, these stocks have outperformed over the long haul. Moreover, they've failed to win much support on Wall Street.
Diving into the details, the average 52-week return for the oil sector stocks we track is almost 50%. What's more, 24 of the 29 names are perched above their 80-day moving averages. That said, it's also worth noting that the corresponding exchange-traded fund (ETF), the VanEck Vectors Oil Services ETF (OIH), has been lodged in a tight channel between $34 and $35 over the past few weeks. Long story short, the oil services sector presents a somewhat mixed picture.
In terms of sentiment, skepticism is prevalent. Only 37% of covering analysts have doled out a "buy" recommendation. Plus, on average, 12.6% of each oil stock's float is sold short, representing over a week's worth of pent-up buying power, at average daily volumes.
Similar observations can be made of both HAL and HP. The oil stocks have outperformed long term, with Halliburton sporting a year-over-year gain of 85% at $55.08, compared to Helmerich & Payne's similarly gaudy 82% advance at $78.49. At the same time, skeptics haven't shied away, based on their top-heavy Schaeffer's put/call open interest ratios (SOIR) of 1.34 and 2.59, in the put-skewed 88th and 87th annual percentiles, respectively. Not to mention, 24 million shares are sold short on HAL, and 18 million for HP.
Another key thing HAL and HP have in common is their historical post-inauguration outperformance. The chart below, which comes courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, makes this clear as day:
Specifically, since 2000, HAL has been higher 100% of the time in the week after presidential inaugurations, with a typical return of 5%. HP has been even better. The oil stock sports an average one-week gain of 7.2%, with positive returns across the board, as well.
From a contrarian perspective, this suggests HAL and HP could extend their epic long-term rallies next week, after Donald Trump's inauguration tomorrow. If the stocks can replicate their historical post-event strength, a capitulation among option bears and/or a short-squeeze situation could further catalyze tailwinds.
In order to do that, though, Halliburton Company (NYSE:HAL) and Helmerich & Payne, Inc. (NYSE:HP) will need to post upbeat earnings data. HAL is scheduled to tell all before the open on Monday, Jan. 23, while HP will hit the earnings stage bright and early on Thursday, Jan. 26.
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