With orders and earnings shooting higher, is this FTSE 250 stock a buy?

Although this cheap-looking FTSE 250 stock is cyclical, there’s no denying the strength in the underlying business right now.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

City analysts expect strong progress ahead with earnings for FTSE 250 company Hunting (LSE: HTG), and the share price has been gathering momentum.

Created with Highcharts 11.4.3Hunting Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

It’s clear from the chart the stock and the business have been recovering well. There was volatility in the oil and gas industry during and after the pandemic because of unstable commodity prices, such as oil. Hunting suffered because its customers were having a hard time.

The firm provides precision-manufactured equipment and premium services for the global oil & gas market but that’s not the whole story. It also serves the defence, power generation, space and aviation sectors.

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

We can’t ignore cyclicality

However, despite the diversification of operations, the biggest risk for shareholders remains the cyclical nature of the company’s end markets. Things are going well for the business now, but that situation may change fast. If there’s another general economic downturn or some other global shock, it would be easy to lose money with Hunting shares.

Nevertheless, today’s (29 August) half-year results report is full of positives. In the first six months of 2024, revenue rose by 3% year on year and adjusted diluted earnings per share shot up by more than 60%.

However, there may be more to come. The order book increased by 32% to “record” levels. That outcome was partly driven by large orders from the Kuwait Oil Company during the period.

Meanwhile, those City analysts reckon normalised earnings are set to increase by almost 40% next year on top of the healthy gains expected for 2024.

Chief executive Jim Johnson said the results demonstrate the strength of offshore and international markets. On top of that there’s been “steady progress” in the energy transition industry.

Expanding into new technologies

In a separate announcement today, the company revealed $60m worth of orders from major North Sea operators for organic oil recovery contracts over a five-year period. It seems the operational momentum is continuing at pace, and for the time being there’s little sign of any cyclical weakness.

Johnson reckons the orders are a “significant” step towards the expansion of organic oil recovery technology. They demonstrate “confidence” in Hunting’s ability to deliver new technologies for the energy industry.

Overall, Johnson’s assessment of the outlook for the business was upbeat and positive.

But is the stock a buy for investors right now? I think it may well be worth consideration as part of a diversified portfolio for those wanting exposure to the oil, gas and energy sectors. After all, the valuation doesn’t look excessive.

With the share price near 417p, the stock is changing hands at around just over 10 times next year’s predicted earnings. That compares to the FTSE All-Share index with its forward-looking price-to-earnings ratio around 12.5.

On balance, and despite the risks, I reckon Hunting’s strong operational momentum and modest-looking valuation makes the business well worth deeper research and consideration now.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »

Investing Articles

What’s happening to the Rolls-Royce share price now?

The Rolls-Royce share price has taken a knock from US trade tariffs, but it's still gained more than 50% in…

Read more »

Investing Articles

10 UK shares that are 50% or more off their 52-week highs

These UK shares have been hit hard. And Edward Sheldon believes there could be some opportunities for those with a…

Read more »