Sweet 16 Update - April 23
Posted: Sat Apr 23, 2022 11:39 am
Last week we learned that very few companies are immune from "Market Risk". There is a lot of headline "noise" causing many investors to move to the sidelines. "FEAR of the Fed" will be a headwind for the overall market all year.
For the week ending April 22 the Sweet 16 lost 9.94%, but it is still up 46.18% YTD and the fundamentals are still pointing to higher oil & gas prices this summer. The sanctions against Russia have had little impact on the physical global oil market so far, but they will this summer. If you watched the AEGIS webcast replay we sent out on Friday, you know that the U.S. natural gas market is going to be dangerously tight heading into the next winter. We are one heat wave away from double digit natural gas prices.
During the week the S&P 500 Index lost 2.53% and is now down 10.37% YTD.
The front month NYMEX contracts for WTI ($101.75/bbl) and HH gas ($6.594/MMBtu) are above what I am using in all of my Q2 2022 forecasts.
Earthstone Energy (ESTE) was the only Sweet 16 member that posted a small gain during the week. It is still trading at a 140% discount to my valuation.
First Call's price targets for all 16 companies went up last week and the Wall Street Gang is adjusting their forecast models for higher oil & gas prices. First Call's price targets are still below my valuations for all 16 companies. I believe solid Q1 results and adjusted guidance should result in numerous upgrades for this group. All 16 companies are generating lots of free cash flow from operations and several of them should be announcing dividend increases.
The "gassers" still lead the pack:
CRK up 99.88% YTD
AR up 87.77% YTD
EQT up 82.21% YTD
RRC up 70.22% YTD
CTRA up 52.42% YTD < I expect a big dividend increase and I will be moving CTRA to our High Yield Portfolio in my next newsletter.
Q1 Results to be announced next week:
April 26: MTDR and RRC
April 27: AR and EQT
I will be highlighting Range Resources (RRC) in today's podcast.
For the week ending April 22 the Sweet 16 lost 9.94%, but it is still up 46.18% YTD and the fundamentals are still pointing to higher oil & gas prices this summer. The sanctions against Russia have had little impact on the physical global oil market so far, but they will this summer. If you watched the AEGIS webcast replay we sent out on Friday, you know that the U.S. natural gas market is going to be dangerously tight heading into the next winter. We are one heat wave away from double digit natural gas prices.
During the week the S&P 500 Index lost 2.53% and is now down 10.37% YTD.
The front month NYMEX contracts for WTI ($101.75/bbl) and HH gas ($6.594/MMBtu) are above what I am using in all of my Q2 2022 forecasts.
Earthstone Energy (ESTE) was the only Sweet 16 member that posted a small gain during the week. It is still trading at a 140% discount to my valuation.
First Call's price targets for all 16 companies went up last week and the Wall Street Gang is adjusting their forecast models for higher oil & gas prices. First Call's price targets are still below my valuations for all 16 companies. I believe solid Q1 results and adjusted guidance should result in numerous upgrades for this group. All 16 companies are generating lots of free cash flow from operations and several of them should be announcing dividend increases.
The "gassers" still lead the pack:
CRK up 99.88% YTD
AR up 87.77% YTD
EQT up 82.21% YTD
RRC up 70.22% YTD
CTRA up 52.42% YTD < I expect a big dividend increase and I will be moving CTRA to our High Yield Portfolio in my next newsletter.
Q1 Results to be announced next week:
April 26: MTDR and RRC
April 27: AR and EQT
I will be highlighting Range Resources (RRC) in today's podcast.