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US Midcaps, two years on
Industrials
Kailash Capital Research argues that midcap allocations have shrunk to an unprecedented 19.4% of the Russell 1000, setting a fresh six-decade low beneath the dot.com trough. Although the relative trade lagged by 3.6% since year-end 2024 (Russell 1000 up 32.3% vs. 28.7% for midcaps), valuation spreads have stretched right back to dot.com peak extremes. The Russell 1000 trades at 3.3x sales (the 99.9th percentile historically) versus 1.7x for midcaps, leaving the relative price-to-sales multiple at 1.9x. Crucially, the largest 50 stocks trade at 6.0x sales, matching the dot.com record of 3.5x the midcap sales multiple. Sector concentration has also intensified, with IT expanding to 36% of the large-cap benchmark, whereas midcaps offer broader US economic exposure led by Industrials at 17%. Kailash Capital Research reiterates funding midcaps by trimming mega caps, ranking AES Corp (AES), Cheniere Energy Inc (LNG), Popular Inc (BPOP), Axis Capital Holdings Ltd (AXS), and Halliburton Co (HAL) at the top of their 25-stock screen.
Energy
Priced for shrinking margins just as pressure-pumping capacity is tightening. North American frack calendars are already filling, pricing power is improving and record-low inventories of drilled-but-uncompleted wells mean producers increasingly need new drilling rather than simply completing old wells. International growth provides a second leg, with HAL targeting ~$16bn of revenue by 2028. Recent awards in Brazil and Saudi Arabia add further upside, while Kailash sees potentially substantial future revenue and profits from Venezuela, where HAL could be one of the biggest “picks and shovels” beneficiaries if the recently announced US oil deal progresses. FCF remains strong and has funded meaningful buybacks. Despite this improving backdrop, the stock trades at just 15.3x 2026E P/E and 8.5x EV/EBITDA, large discounts to SLB, Baker Hughes and the broader market.
Energy boost
TenViz offers AI-powered tools for investment advisors and fund managers. Lately, their key bullish theme has been to BUY energy. For crude, we are seeing pre-Ukraine war levels and prices in backwardation, a bullish sign. Investors should also look to BUY Uranium – the world will need a lot of it – and gasoline. Consider snapping up oversold energy indices too as they are poised to bounce back, with suggestions including BUYs in energy exploration and production, including a fresh BUY on EQT Corp; another fresh BUY in the Oil Services Index, including a BUY on Halliburton.
FirstAlert: 10Q/10K analysis module
280First's flagship product rapidly extracts actionable insights from financial filings through quantitative and qualitative inputs. Recent alerts include: 1) Casella Waste Systems - targeting larger, more strategic acquisitions which would require additional financing either in the form of debt or equity. 2) Halliburton - no longer focusing on increasing cash returns to shareholders. 3) Monolithic Power Systems - loss of customers and less bullish on margins. 4) Prestige Consumer Healthcare - worries around demand elasticity and market share. 5) Seagate Technology - large hyperscale DC customer concerns.
4Q22 Earnings: A quantitative and predictive outlook
Energy
Cmind is rolling out 4Q22 earnings beats / misses predictions at both the sector level and company level. In the Energy sector, they have made predictions for 182 US public companies. Breaking down to cap level, there are 34 large-cap (28 predicted to beat vs. 6 predicted to miss), 37 mid-cap (20 beats vs. 17 misses) and 111 small-cap ( 52 beats vs. 59 misses) companies. Overall, the energy sector is predicted to outperform most other sectors. Stocks expected to beat: Schlumberger, Diamondback Energy, Halliburton and Plains All American Pipeline. Stocks likely to miss: Cheniere Energy, Williams Companies, Enbridge and Imperial Oil.
E&P outlook for 2023
Energy
Report by
Blueshift Research
BL
1) Blueshift's oilfield sources expect capital spending to increase 10-15% Y/Y in North America next year. 2) There is a new trend underway in E&P structural realignment that may slow the hiring of more rigs. 3) Helmerich & Payne, Patterson-UTI Energy and Precision Drilling to benefit the most from a tight drilling market in 1H23. 4) Increases in wellsite intensity to benefit integrated pressure-pumping companies such as Halliburton and Liberty Energy; ProPetro is one to watch. 5) Strong demand for offshore drilling remains intact. 6) Nabors Industries’ new robotic rig technology is gaining traction.
