Sweet 16 Update - Sept 10

Post Reply
Posts: 34570
Joined: Fri Apr 23, 2010 8:22 am

Sweet 16 Update - Sept 10

Post by dan_s »

The Sweet 16 gained just 0.14% during the week ending September 9 and it is now up 58.79% YTD, but still trading at an 88% discount to my Fair Value Estimates. My valuations are what I think the stocks are worth today.
All 16 companies are trading below First Call's price targets, which continue to drift toward my valuations.

The S&P 500 Index gained 3.00%, but is still down 14.66% YTD.

Except for the big acquisition announced by EQT Corp (EQT), there wasn't much news this week. If you think HH gas prices will average more than $5.00/MMBtu in 2023 (like I do), you want to own EQT. It is the largest natural gas producer by a wide margin. EQT's Q1 2023 results should be "stunning".

Leading the pact are:
Comstock Resources (CRK) up 132.14% YTD
Antero Resources (AR) up 129.03% YTD
EQT Corp. (EQT) up 121.69% YTD
All five of our "Gassers" are in great shape.

This is the "Year of the Roller Coaster" for oil companies and definitely a big year for all of our five gassers (AR, CRK, EQT, RRC and SBOW). I think SBOW has the most upside, followed by CRK. AR should be announcing a dividend soon, which should draw more of Wall Street's attention. Lot of hedge funds will only invest in companies that pay a dividend.

If Callon Petroleum's (CPE) Q3 results come close to my forecast, the stock should move quickly over $50.00, since it is trading at just 1.6 X my 2022 operating cash flow per share forecast of $26.46 for 2022.

As a group, the Sweet 16 is trading at 2.86X my 2022 operating cash flow per share forecast. That is insanely low for a group of this quality. All 16 companies are free cash flow positive. Nine of them now pay dividends. This group should be trading for 6X to 8X operating cash flow per share.

I will profile two of the Sweet 16 in my Saturday podcast.
Dan Steffens
Energy Prospectus Group
Post Reply