Sweet 16 Update - August 15

[dan_s]

I starting this a day early because I just finished updating the last of our three large-cap gassers, Range Resources (RRC). The updated profile and my forecast/valuation model for Range will be posted to the EPG website this evening.

A "Paradigm Shift" is a fundamental change in approach or underlying assumptions. When they happen on Wall Street the Big Money starts to shift. Paradigm Shifts are behind all major sector moves. Over the last two weeks we have seen the underlying assumptions for the U.S. natural gas market change from a "glut" to a rapidly approaching shortage right in the middle of the winter heating season.

This is a good time to remind you that First Call's price targets are always on a 30-60 day lag. They are just the average of all of the price target on file with Reuters. For RRC there are 24 analysts report included in the current price target of $6.81 and only four of them are dated in August. Range announced Q2 results and updated guidance on August 3rd.

All of my Sweet 16 forecast/valuation models have been updated. You can find them on the EPG website (after you log on) under the Sweet 16 tab.

I've also updated most of the Small-Cap and High Yield forecast models as well and I hope to get the rest of them done next week.

The "gassers" still have a lot of running room because the NYMEX Strip is moving up and if natural gas prices do average more than $3.00 next year it will give all of these companies a nice revenue boost. In addition to CRK, EQT and RRC I like companies like XEC and OVV that produce a lot of gas and NGLs. NGL prices were terrible in Q2, so there is a lot of upside for us there as well.

I will spend more time on gas in my Saturday podcast. Last Saturday's long podcast (32 minutes) is still up on the website.

Piper Sandler has upgraded Cimarex Energy Co (NYSE: XEC) from Neutral to Overweight. They raised their price target from $31 to $43.