This Is the Hottest Stock in the Energy Sector. Should You Invest?
Key Points
The oil and gas services company also reported record order volume for the quarter.
It is, however, seeing some disruption to its business from the war in the Middle East.
- 10 stocks we like better than Baker Hughes ›
The energy sector has significantly outperformed the broader stock market this year. It's up about 32% year to date, while the S&P 500 index has climbed about 4.2%. Energy is also the best-performing sector this year.
But over the past week or so, one energy stock has beaten them all. I'm talking about Baker Hughes (NASDAQ: BKR), the oil and gas equipment and services company based in Houston. The stock soared 10% over the past five trading days, beating the broader energy sector, which rose about 4.4% as measured by the State Street Energy Select Sector SPDR ETF, which tracks the S&P 500 energy sector.
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The primary reason Baker Hughes shares have skyrocketed is the company's unexpectedly good first-quarter results. Last week, it reported those results, beating Wall Street expectations for both revenue and profits.
Revenue of $6.6 billion during the quarter was better than the $6.34 consensus analyst estimate. And adjusted earnings of $0.58 a share handily beat the consensus estimate of $0.49.
Image source: Getty Images.
The company reported record order volume in the first quarter and expanded margins. Both were driven in part by a surge in electricity demand from data centers and increased investment in liquefied natural gas infrastructure and grid equipment.
Management did say, however, that the ongoing conflict in the Middle East is disrupting business, with a 19% decrease in revenue from the Middle East/Asia region.
Still, with oil prices expected to remain elevated through the remainder of 2026, no matter when or how the war is resolved, the stocks of oilfield services companies like Baker Hughes remain attractive.
Should you buy stock in Baker Hughes right now?
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Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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