Diamonds and Dogs

10/19/16

The oil sector is back. Oil driller, Halliburton (HAL) is up 5% to a new 52 week high after beating earnings estimates. Business remains tough as revenues fell 31.3% year over year to $3.83 billion, but the fundamentals are pointing in the right direction. Cash flow from operating activities for the third quarter was in excess of $1.0 billion. Increased commodity prices have stimulated rig count growth. Halliburton expects fundamentals to keep slowly improving into 2017.

Cree (CREE) is shining a little less bright today. The LED light maker is down 9% to a new 52 week low after missing earnings and guiding next quarter earnings and sales below consensus.  The analyst at Needham downgraded the stock to a hold saying the company is not showing any growth right now with ongoing challenges in rebuilding business momentum in the Lighting business. Without any meaningful M&A on the horizon, the analyst further mentioned CREE will require 2-3 quarters before it returns to growth.