Energy equipment and services company Baker Hughes (NASDAQ: BKR) delivered a solid, if unspectacular, set of fourth-quarter results this week, but they were enough to confirm the investment case for the stock. It's easier to engineer structural changes in a business when end markets are positive, and it's a lot easier to invest in growth businesses when the core business is growing and generating earnings and cash flow. Those are the favorable conditions facing Baker Hughes right now, and the stock is attractive for investors. 

While ongoing strength in energy prices -- despite recessionary talk, the price of oil is still $82 as I write -- is encouraging investment in the industry, the oil majors are only cautiously opening the spending tap. There's a desire not to get caught out again as they were in 2014 when the price of oil slumped, and there's also the longer-term question of the future of fossil fuels in light of growing environmental regulation and the emergence of renewable energy trends. 

That's good news for Baker Hughes as it speaks to the potential for a long cycle of investment in the industry and the avoidance of the usual exaggerated boom-and-bust cycle of excess supply creation leading to collapsing energy prices. 

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Source Fool.com