Baker Hughes Sets Up as Oil Stocks Lead in Bear Market

In this current bear market, eight of the 10 best-ranked industry groups all come from the energy sector, with a focus on oil and gas stocks. And it doesn’t stop there. The Oil and Gas Machinery and Equipment group, including to Baker Hughes (BKR), ranks 23 out of 197 groups of IBD tracks.


Energy names, including BRK stocks, are also undeniable on the IBD Breakout Stocks Index. In addition to Baker Hughes, oil and gas reserves EQT (EQT), TotalEnergies (TTE), Western Midstream Partners (WES) and Williams Cos. (WMB) have also drilled their way into the index.

Further showing how energy is one of the few bright spots in this bear market, the Energy Select Sector SPDR (XLE) ETF has jumped to new highs.

See who’s on the IBD Breakout Stocks Index in this bear market

Baker Hughes turns on hydrogen contracts

Baker Hughes, based in Houston, has a global presence, conducts business in more than 120 companies and employs more than 54,000 people. The company’s business spans four main areas: oilfield services, oilfield equipment, turbomachinery and process solutions and digital solutions.

In March Baker Hughes won a contract to supply hydrogen-ready turbocharging technology for a pipeline in Greece. The gas turbines and compressors can run on a mixture of natural gas and hydrogen for a new compressor station that will serve the country’s domestic gas supply. The contract follows a Baker Hughes instillation of the first hydrogen mixture gas turbine for a gas network in Italy.

Last quarter, the company posted a 25% profit growth. Analysts are forecasting a 130% increase in earnings per share for the current quarter. Revenue growth has been weak, with an average annual decline of 6% over the past three years. In Stock Checkup, Baker Hughes has a D SMR Rating, which tracks revenue growth, profit margins and return on equity.

BKR shares recapture benchmark with RS line at new high

As the bear market continues and Baker Hughes fundamentals have lagged, the relative strength of BKR stocks has hit a new 52-week high.

As the stock establishes a new base, it has moved above the 50-day moving average again. BKR share is working on a consolidation with a potential buying point of 39.88. Baker Hughes turned around to close 1.5% on Wednesday, but the stock continues to rise more than 3% for the week so far.

After a profit-driven decline in April, the 21-day line fell below the longer-term 50-day benchmark. To show reflective technical strength, look for the 21-day line to get back above the 50-day moving average as Baker Hughes explores a possible breakout.

But also take the market environment into account. While the energy sector remains strong, the bear market continues to drag most stocks down, making it a risky time to make new purchases.

IBD Breakout Opportunities ETF

Innovator Capital Management’s IBD Breakout Opportunities ETF tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund essentially allows you to invest in the entire index, in addition to or instead of buying individual stocks. Learn more about the ETF and Innovator funds here.

Follow Matthew Galgani on Twitter at @IBD_MGalgani

You may also like:

Top Funds Bet on These Stocks to Rise Out of the Downside

Warren Buffett Stocks: MSFT, GOOGL, FB Among 30 Stocks on This Screen

Oil stocks, leading chemical companies targeting 57%-156% growth in 2022

Stay protected and prepare for the next uptrend with this 3-step routine

Identify bases and buy points with this pattern recognition tool

Leave a Comment