Sweet 16 Update - June 11

[dan_s]

The Sweet 16 gained 2.68% during the week ending June 10th and it is now up 82.77% YTD.

During the week, the S&P 500 Index lost 4.36% and is now down 18.16% YTD. Ouch!
Tech is getting hammered and the Energy Sector is killing the entire market.

I have updated all of the Sweet 16 forecast models for my new oil & gas price deck, which already looks conservative. Based on my forecasts the Sweet 16 still has 57% upside from where it closed on Friday. Sweet 16 Q2 results should easily beat First Call's EPS forecasts.

The WTI oil price has increased for seven weeks in a row and some very smart people are predicting much higher oil prices in the 3rd quarter.

Financial Times 6-10-2022:
• JPMorgan’s chief executive Jamie Dimon thinks oil prices could surge to $175 a barrel later this year.
• Jeremy Weir, the head of commodity trader Trafigura, says oil could go “parabolic”.
• Energy Aspects, a consultancy with clients stretching from hedge funds to state energy companies, says we are facing “perhaps the most bullish oil market there ever has been”.
• Goldman Sachs thinks oil prices will “average” $140 a barrel in the third quarter of this year.

The JUL22 NYMEX contract for HH natural gas spiked to over $9.60/MMBTU on June 8, but it pulled back that afternoon on the news of an explosion at a Freeport, Texas LNG export facility that will take 1.5 Bcf per day of LNG exports offline for up to three weeks. In my opinion, it is a short-term dip in demand for U.S. natural gas that will just prolong the gas shortage in Europe.

My Top Picks for next week are:
> Callon Petroleum (CPE) with my valuation of $125.00
> Comstock Resources (CRK) with my valuation of $39.00
> Earthstone Energy (ESTE) with my valuation of $38.00
> PDC Energy (PDCE) with my valuation of $153.00

Take time to review carefully the Sweet 16 Summary Spreadsheet that will be posted to the EPG home page on Saturday morning.

[mkarpoff]

Since when do you do a "Top PIcks for Next Week," and why these in particular for next week?

[KGardiner]

Sorry to bug you Dan, but the June 10th Sweet 16 spreadsheet is a link to the June 4th sheet.

Thanks for all of your wonderful due diligence!

Kevin

[dan_s]

I just noticed that last week's spreadsheet was posted by mistake. When I updated it for June 10 closing prices, I somehow saved it to the wrong folder. The June 11th spreadsheet will be posted shortly.

"Since when did I start reporting my Top Picks?" < Since I decided to do it yesterday. I am the Boss of EPG.
I just wanted to point out the ones that have the most upside to my current valuation.

[mikelp]

thanks Dan,
appreciate your timely analysis of the energy sector
as we navigate volatile markets

have a great week!

[dan_s]

We appreciate your support.

Since EPG was founded in 2001, I believe this is the best shape the Sweet 16 have been in. All 16 are free cash flow positive, the balance sheets are in good shape and they have lots of running room. All of them should report Adjusted Net Income for Q2 that beats the current First Call EPS forecasts.

I also think the 8 companies in the Small-Cap Growth Portfolio are in great shape. I urge all of you to join me on Tuesday's webinar.