Optimistic outlook for Hunting shares

Whilst some firms have been hurt by rising oil prices, storage and transportation provider Hunting have seen shares soar, and they still 'have further to go'.

Many firms have been hurt by rising oil prices, says Harry Wallop in The Daily Telegraph, but Hunting (HTG, 400p) "has not been one of them". In its first-quarter update last week, the firm, which provides storage and transportation for oil majors such as Total and Shell, reiterated that conditions "reflect a continuation of the strong activity experienced throughout 2005", when it reported a 168% rise in earnings per share. Moreover, its chairman "expects strong trading conditions to continue for the rest of the year".

Such optimism is not without foundation, says Lucy Warwick-Ching in the FT. The firm "has evolved significantly over the past five years" after it divested its defence business to concentrate on oil. Since then, it appears to be reaping the benefit of more demand for parts and services as the high oil price encourages ever-more exploration of difficult deposits. It's also been able to maximise margins by blending crudes "in order to take advantage of pricing anomalies".

Hunting's shares have been on a bit of a tear, rising from just over 60p in early 2003 to £4 currently. Yet they're trading on a multiple of just 18.7 times current year earnings. It might have cut the discount to its peers considerably, says Wallop, but the shares still "have further to go". Warwick-Ching agrees. Buy.

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