Sweet 16 Update - Dec 2

[dan_s]

The Sweet 16 main spreadsheet that shows my valuation for each of the Sweet 16 stocks and the current First Call Price Targets will be posted to the EPG website Sunday afternoon.

For the week ending December 2nd the Sweet 16 moved up 1.92% with most of the gains coming on Friday. More important to me is that the First Call Price Targets continue to drift toward my valuations. FC price targets for FANG and RSPP have moved over my valuations.

The outlook for all 16 companies is much better than it was a year ago, yet most of them are trading in the bottom half of their 52-week range.

When the GOP Tax Plan passes it will give all of these companies a boost because they all have big deferred income tax liabilities that will be reduced. < This improves the balance sheet ratios.

Updated profiles and forecast models for all 16 companies can be viewed and downloaded from the EPG website.

The weather forecast starting December 7 through January 5 is now extremely bullish for natural gas and NGL prices. It could be the coldest four weeks over the NE quarter of the U.S. in several decades. If so, we may see natural gas in storage go below 3,000 Bcf by December 31st. That will create major concern for utility companies that must meet demand in their regions for residential heating. You may recall that I've said in my weekly podcasts that when the utilities start bidding against each other in the physical gas market is when we've had BIG SPIKES in gas prices.
To confirm this go to: https://www.wunderground.com/forecast/u ... alwx_10day
Then go to https://www.weatherbell.com/premium/ and watch the Saturday Summary.

If natural gas in storage dips to 3,000 Bcf by 12/31 there is a very good chance that natural gas prices will go over $4.00 in January.

[jb2257]

I am so discouraged with this sector and am so tired of losing money year after year. I thought that we would get some rotation into the sector but I guess i was wrong again. Good luck to all of you trying to invest in these stocks.

[dan_s]

Ask this: Does this world need a steady supply of energy? If so, where will most of the energy that supports our standard of living come from?

Then remember that FEAR and GREED drive the markets. Right now there is a lot of FEAR over the Energy Sector, most of which is driven by "fake news". There is a lot of GREED driving up Bitcoin investments; a sector that no one can explain.

All of my valuations for these stocks are based on $50 oil and $3.00 natural gas. I believe oil & gas prices need to and will go higher in 2018 to fund development of the future supplies we will need.

I've worked in the upstream oil & gas sector for almost 40 years and I have lived through six major oil price cycles. These oil price cycles really suck, but when they suck the most it is the best time to position your portfolio for the rebound.

[jb2257]

I'm not complaining about your research, but there is some reason why no one wants to be in the sector. Of course the 3% drop in the price of oil today doesn't help and the stocks can't go up in that scenario.

[dan_s]

I agree that this has been a very "painful" cycle.