Sweet 16 Update as of 9-15-2012

[dan_s]

I have posted updated spreadsheets for the Sweet 16:
> One compares my estimated Fair Value for each stock to the First Call Price Targets
> The second is a summary of my Net Income & Cash Flow Forecast models for each company.
These are updated each weekend. I highly recommend that EPG members scan these reports each Monday. They can be extremely helpful if you are a trader.

This morning I compared my Q3 earnings per share forecasts for each company to the current forecasts by First Call. Most of the Sweet 16 should easy top First Call's estimates. Keep in mind that First Call's EPS estimates are an average of all the analysts forecasts sent to them. Since many of them are months old, they tend to low ball the coming quarter during a period of rising commodity prices. Look for First Call to raise their forecasts after the end of the quarter as some of the analysts update their models.

The S-16 was up 7.5% last week and more than 12% in the last two weeks. Energy Sector stocks have lagged the overall market all year, but they are drawing a lot more attention these days, thanks to the unrest in North Africa. If Iran decides to join the party and challenge the U.S. Navy the price of oil will spike. Europe is more exposed to supply disruptions in North Africa than the U.S., therefore we may see the gap between Brent and WTI widen over the next few weeks if the violence continues.

This morning I sent updated profiles for DNR and EOG to all of our members via Flash Alert. Both companies are heavily weighted to oil, so I urge you to read the reports and feel free to post any questions here.

If WTI holds in the upper $90's per bbl and natural gas follows the NYMEX strip up to $3.50/mcf by year-end, I believe we are in for a repeat of 2010. Based on my estimates, there is approximately 40% upside in the Sweet-16 by year-end.

On Monday, I will send out a Flash Alert on the Onshore Drillers. We are updating our profiles on HP and PTEN.

Profiles waiting for my review are MIND, MHR, AREX, SARA and Osage. The interns are keeping me very busy.