Halliburton Considered A Strong Buy Compared To These 2 Companies

What follows is a list of large-cap companies that have yielded positive returns for the year to date. They cover a variety of industries: Communications, mining and oil well services and equipment. Halliburton (HAL) and America Movil (AMX) have underperformed the S&P 500 while Alcoa (AA) has outperformed the index by nearly 950 basis points. Based on my review of the fundamentals, I find the strongest upside followed by Halliburton. According to T1 Banker, the latter is currently preferred on the Street. Note that all ratings are sourced from T1 Banker.

America Movil

America Movil is rated a "hold" and trades at a respective 12.8x and 11.6x past and forward earnings with a dividend yield of 1.2%.

Consensus estimates for America Movil's EPS forecast are that it will grow by 21.3% to $2.05 in 2012, decline by 1.5% in 2013, and then grow by 5.4% in 2014. Assuming a multiple of 13.5x and a conservative 2013 EPS of $1.98, the rough intrinsic value of the stock is $26.73, implying 11.6% upside. Management forecasts improving business trends in 2012 with particularly strong organic gains. Despite Billionaire Carlos Slim expressing interest in acquiring undervalued European business, the company is likely to steer away from takeover activity and focus on infrastructure upgrades. I anticipate that the company will soon capture a third of the Latin American market.

Alcoa

Alcoa is rated a "hold" and trades at a respective 19.3x and 10.7x past and forward earnings with a dividend yield of 1.2%.

Consensus estimates for Alcoa's EPS forecast are that it will decline by 26.4% to $9.53 in 2012 and then turnaround to grow by 81.1% and 28.1% in the following two years. Assuming a multiple of 16x and a conservative 2013 EPS of $0.93, the rough intrinsic value of the stock is $14.88, implying 45% upside. I believe that the lack of visibility over earnings is irrationally discounting the company and will help generate high risk-adjusted returns when a full global recovery materializes. Management's vertical integration of operation allows for the company to fully exploit improving trends before competitors do. Aluminum prices are trending better than what some expected and 7% consumption is likely for 2012.

Halliburton

Halliburton is rated a "strong buy" and trades at a respective 11.1x and 8x past and forward earnings with a dividend yield of 1%.

Consensus estimates for Halliburton's EPS forecast are that it will grow by 16.4% to $3.91 in 2012 and then by 15.3% and 21.3% in the following two years. Assuming a multiple of 11x and a conservative 2013 EPS of $4.47, the rough intrinsic value of the stock is $49.17, implying 36.7% upside. Following the resolution of the BP (BP) oil spill, the multiples are likely to naturally expand. After all, the fundamental of Halliburton are strong: It delivered solid 4Q results, yielding the highest quarterly revenue in the firm's history. The company has nearly doubled in size as it navigated a challenging economy over the last five years. This improved scale has yet to fully demonstrated on a normalized market environment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.