Why is the Sweet 16 moving higher?

[dan_s]

MY TAKE is that the Wall Street Gang is telling everyone to rotate money into commodities and smart fund managers see how profitable the Sweet 16 are going to be if oil and gas prices stay anywhere close to where they are today.

On December 31st the Sweet 16 closed at a PE ratio based on my 2022 forecasts of just 5.56. That is an extremely low PE ratio for companies of this quality. I think the average PE ratio for the S&P 500 is ~22.

Even more encouraging (to me) is that the Sweet 16 closed last Friday at just 2.74 X my operating cash flow per share forecasts for 2022. That is "insane" for companies of this quality. Before the Climate Change Wackos made it bad to invest in oil & gas companies, the Sweet 16 was trading in the range of 6X to 10X operating cash flow per share.

You can find the PE ratios and CFPS multiples for each company on the Sweet 16 main spreadsheet that I update each weekend. Log on and click on the Sweet 16 tab to find it.

All of the Sweet 16 companies are going to generate a lot of free cash flow from operations. Half of them are paying dividends and the other half should be paying nice dividends by year-end. They are all paying down debt and several have aggressive stock buybacks. Balance sheets are in good to great shape and their year-end reserve reports are going to be very strong.

[Fraser921]

Total investing gift, imho.

I even don't mind if they hedge at $ 80

The FCF will be spectacular

[dan_s]

Debt holders were requiring a lot of the companies to hedge. That requirement is now much lower and they can use collars with high ceilings to hedge future production. Lots of "Bad Hedges" expired last week.