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Halliburton is poised for a rapid rise in profits as oil companies ramp up spending to tap new shale finds. That could send its shares more than 40% higher within a year.

The U.S. is enjoying an oil production boom driven by new drilling technology, which has unlocked vast amounts of oil and gas from porous rock. Early on, that proved lucrative for oil services companies. More recently, too many of them competed for work in a handful of major shale deposits in states like Texas, North Dakota and Ohio, which drove down service prices and profit growth.

Halliburton (ticker: HAL) reported a profit decline in 2012 and is expected to grow earnings per share just 4% this year, according to analysts polled by FactSet. Its shares more than doubled in two years ended July 2011 to peak at over $57. Since then they've lost ground and recovered, trading recently near $52.

Halliburton and rivals like Baker Hughes (BHI) and Schlumberger (SLB) have trimmed costs to preserve profits. At the same time, recent U.S. shale finds promise to spread demand for drilling services more broadly, to states like Colorado and Louisiana and to new parts of Texas.

Industry spending on exploration and production should rise 6% this year, predicted Goldman Sachs in a Monday note to investors. That bodes particularly well for companies like Halliburton, which has heavy exposure to onshore production services. Its earnings per share should rise at a compounded rate of 34% per year through 2015, according to Goldman. The Wall Street consensus shows earnings totaling $3.13 this year and jumping to $5.13 by 2015.

The fast growth could catch stock investors by surprise. At 16.6 times this year's earnings estimate, Halliburton shares look fairly priced. But those earnings represent a slow patch. The stock trades at just 10.1 times the 2015 estimate. Cowen and Company analyst James Crandell predicts the stock will hit $75 in a year, a 44% increase. That's based on the stock rising to 14.3 times his 2015 earnings estimate of $5.25 a share. Crandell predicts gains of more than 20% for Schlumberger and Baker Hughes, too.

Barron's senior editor Jack Hough predicts the U.S. shale boom could result in a windfall for oil companies, namely Halliburton. Photo: Getty Images.

Halliburton will host an analyst day on Nov. 6 when it will likely update Wall Street on its colorfully named efficiency drives, Frac of the Future, aimed at drilling, and Battle Red, a corporate cost overhaul. It may also report on changes in service demand and pricing. If the news is promising, it could prompt Wall Street to raise its near-term earnings targets, giving shares a quick lift. Several drillers have recently released capital spending budgets for next year that show healthy growth.

Halliburton collects more than half its revenue in North America but is also benefitting from strong growth in Russia, the North Sea, Saudi Arabia and Norway. Activity in Brazil and Mexico has been slumping but should bottom out in the first quarter of next year and recover thereafter, according to Cowen's Crandell.

Shares carry only a modest dividend yield of 1%. Halliburton last quarter splurged to repurchase more than 7% of its outstanding shares. If profits jump as much as expected in coming years, it will likely have gotten an excellent deal.

In short, Halliburton is a well-oiled money maker that should reward investors.

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