Baker Hughes Stock Just Flashed a Major Buy Signal

Added: 2026-06-02

[00:00:00]All right, let's move on to the second stock on this list today. And we are still looking at more of that picks and shovels in the oil and gas industry.

[00:00:07]Right.

[00:00:08]>> Exactly. Yeah. We're looking at Baker Hughes, BKR. And Baker Hughes, right?

[00:00:11]When we talk about pro pump, they're specialist. Baker Hughes. When you think about oil and gas, they're everywhere. I mean, there's a reason why when when we talked about that that that that uh that drill rig count stuff that literally comes from Baker Hughes. Baker Hughes reports that information that everybody on the oil and gas industry hangs on in terms of paying attention to and right it just shows you they they are when you think about anything in oil and gas if you're going to see more investment you're going to see them but they've got an extra benefit from this too which is one if we need to re rebuild the um the the cutter the cutter LG trains right for LG exports Baker Hughes is one of the only suppliers who makes any of that equipment and what's really interesting about this one is this is a company that when we look at it on a cleanup uniform accounting basis return on assets is more than double what Azure ported metrics say. Azure reported metrics say it's like a 5% return on asset cost of capital business. We know it's closer to 15%. And the market at current valuations for Baker Hughes is basically pricing return on assets to drop not realizing all of these really bullish catalysts for the company that we see coming down the pike.

[00:01:15]>> Yeah, I love hearing your accounting perspective too. I think that's a great way to look at these companies uh even deeper than what just shows up on that initial earnings report. the the basic numbers that you see. I think the one thing that really stood out to me that you said about this company is that their hand is in every single oil rig that's going out there. They they're in they're in everything. And so, of course, they're going to benefit as more rigs and and more investment is going into building the infrastructure here in the US. Do they also have a connection to the energy and demand and the AI data center story? Are they a part of that as well?

[00:01:45]>> Any of the times that you're going to basically have this buildout happen that is relying on energy, Baker Hughes is going to benefit. And they've got some stuff that actually does touch on the AI data center part of the narrative. But the bigger part is how if you're going to need more power anyway that you're going to need it, you're going to need more of the downstream effects. They're going to benefit.

[00:02:02]>> I often ask my my students in my my courses and I'll say, "Name one company from the gold rush. Name one gold company from the gold rush." And so, of course, what you found is that it wasn't just the companies that survived till today that were picks and shovels and actually wheelbarrows and other things.

[00:02:19]It was also the clothing, the banking, the food, whether it's Levis's, Wells Fargo, Armor Swift, Giraelli chocolate company got its start in 1849 selling chocolate to gold miners. So you can go and find all these companies that it's the food transportation. So when we say picks and shovels, we mean anything in the ecosystem that's going to benefit.

[00:02:38]We don't have to make a bet on whether Exxon or any of the big oil companies are right in building the rigs. We only need to know that they are building the rigs and other companies are going to make money whether oil stays at 85 or comes back down to 50 because those rigs are still going to be there and that that the all the services like Baker Hughes are needed to build in. So when we say picks and shovels, we're looking at a whole line of things other than picks and shovels that could be supporting that.

[00:03:02]>> I love that point Joel too that you are betting on the companies that are already getting that investment. The contracts are already inked. they've already got their supplies going out the door. And so no matter what happens with that uncertain aspect, which is the oil prices, these companies are still going to benefit. Could they see a slowdown a couple years down the road if those contracts stop coming in? That's maybe a potential. I'm not sure. But I also I I think it's a great point that the the money is coming in the door for these companies. I think it's a great way to look at investing without picking a winner uh in in the big mainstream names. Given all the good things you guys have shared about this stock, let's talk a little bit more about the entry point of where it is right now. Do you think that the pullback that we're seeing in this stock as well this last week is enough of an entry point to make it really attractive for investors to see some solid returns on this company?

[00:03:48]>> We always talk about this idea of embedded expectations, right? And so we're always looking at what is the company doing, what can the company do, and what is the market paying for the company to do. And for Baker Hughes, this is a company that, you know, again, 24 and 25 weren't great years for profitability for oil and gas companies.

[00:04:04]And yet, Baker Hughes even then had a 16% return on asset. The way that we look at it, what the market is paying for Baker Hughes to do right now is for Baker Hughes to have a 10% return on asset going forward, give or take. Um, and so when we look at that, we say, "Wow, if we think about all of the tailwinds that we have for this company, as we talked about, the trader homos is not the catalyst that people think of in terms of oil prices dropping to 40 or 50 and natural gas prices dropping to $2.

[00:04:27]That means that everything is going to be resolved. These are big lasting trends that are going to pull on demand for Baker Hughes. And so, yeah, we think ROAS could go higher for Baker Hughes.

[00:04:36]And as it does, that means a lot more upside from here. So, yes, 100%. With the stock having pulled back a bit from the highs that it had made a week or two weeks or 3 weeks ago, we think this is a good opportunity to get in a little more. Absolutely.

[00:04:47]>> There are tons of other great stocks to be looking at in the space story. Make sure to check out this special report with a list of seven of the hottest space stocks all investors should be interested in in 2026. You can scan the QR code or click the link in the description to get that full free report right now on marketbeat.com. And if you are interested in other stock ideas like the one you saw in the clip today, make sure to watch the full interview over on our main channel. You can find that interview