Sweet 16 Update - June 18

[dan_s]

The Sweet 16 lost 38.22% during the week ending June 17 but is still up 44.55% YTD.
The S&P 500 Index lost 4.75% during the week and is now down 22.9% YTD.

My current valuations of the Sweet 16 stocks stays the same because I believe my oil and gas price assumptions are still valid. Q2 results are going to be strong for this group and I expect most of them to beat my forecasts since WTI oil and HH gas prices for Q2 will end up being higher than what I assumed in the forecasts.

Callon Petroleum (CPE) is the only Sweet 16 stock down YTD -2.58% at $46.03. This compares to my current valuation of $125.00 and First Call's price target of $82.04. Callon is in much better shape today than it was a year ago.

The Sweet 16 Summary Spreadsheet has been updated and posted to the EPG home page. Under the first tab "EPS Forecasts" take a hard look at columns R & S and you will see that the portfolio closed on Friday at 2.47X my operating cash flow forecast for 2022. That is an extremely low valuation multiple for a group of this quality. CPE's stock price is just 1.47X operating cash flow per share. The Sweet 16 deserve valuations of 5X to 8X operating CFPS.

All 16 will report strong free cash flow for Q2.

I will finish the newsletter this weekend, so I will save the individual company comments for the newsletter.

CTRA and FANG have been moved to the High Yield Income Portfolio. SBOW and SM have been promoted to the Sweet 16.

Watch the AEGIS video under The View from Houston tab. It will help you understand what is going on in the global energy markets.