Sweet 16 Update

[dan_s]

I have updated my Fair Value estimates for the companies that reported 3rd quarter results last week. A speadsheet with all of my current Fair Value estimates and First Call 12-month price targets can be found under the Sweet 16 Tab.

As of today (11-5-2011):

> My top short-term pick is Mitcham Industries (MIND). The reason is that I have a very high level of confidence in my forecast model. They are going to double EPS from Q2 to Q3, should double them again in Q4 and may double them again in Q1. My Fair Value estimate is $27/share and First Call's 12-month target price is $21.67.

> Energy XXI (EXXI) has the potential to double over the next six months. When their Davy Jones well comes on-line in December it will be big news in Houston. They have two more deep test wells nearing TD. McMoRan Exploration (MMR) is the operator of these projects. MMR is very highly respected in Houston. [MMR has been added to our Watch List. One of our SMU interns has been assigned the task of writing a company profile that will be published later this month.]

> CLR had fantastic 3rd quarter results. I have raised my Fair Value estimate. 3rd quarter production came in 3,000 boepd above my forecast. 4th quarter production will be even higher.

> PTEN a great long-term buy at this price. [You should take a look at our profile on UDRL. It is under the Watch List tab.]

> ROSE and CRZO should move higher with strong 3rd quarter results next week. Both have significant Eagle Ford drilling programs underway. CRZO also has upside in the Marcellus Shale and Niobrara. ROSE has a significant acreage block in western Montana with Bakken potential.

> PXP and XEC are both trading at ~4X cash flow per share. Very cheap for companies of this quality.

> PMG has some significant exploration wells coming up in the next 90 days. PMG is trading at less than 3.5 X my cash flow per share estimate for 2011. Strong Balance Sheet and incredible exploration upside.

Seven Sweet 16 have reported Q3 results. XEC is the only slight disappointment so far and the stock is way oversold.