Sweet 16 Update - Aug 13
Posted: Sat Aug 13, 2022 10:02 am
This is the "Year of the Roller Coaster Ride" as FEAR and GREED fight it out. If not for the FEAR of a recession, the portfolio would be up more than 100% YTD.
For the week ending August 12 the Sweet 16 gained 13.57% and is now up 57.33% YTD. It is still trading at an 88% discount to my "Fair Value Estimates" and at less than 3X 2022 operating cash flow; an extremely low valuation multiple for companies of this quality.
I have been publishing the Sweet 16 Growth Portfolio since 2002 and there has only been a few double-digit weekly moves. I really don't know what the portfolio will do next week, but all 16 companies are in great shape. All of them are generating a lot of free cash flow from operations, have lots of "running room" and none of them have near-term debt problems.
The S&P 500 Index gained 2.83% during the week, but it is still down 10.2% YTD.
The Sweet 16 Summary spreadsheet has been posted to the EPG website home page.
We have published updated profiles for AR, CRK, CLR, ESTE, EQT, EOG, MGY, MTDR and RRC. The other 7 profiles are here waiting for my final review. They will all be published in the next few days.
The "Gassers" continue to lead the pack and I expect that to continue. Natural gas inventories are tight and there is nothing that I can see which will allow the utilities to build inventories sufficient for them to safely make it through a colder than normal winter. Miss La Nina and Old Man Winter, with a little help from the LNG exporters are likely to push HH ngas prices over $10/MMBtu within four months.
AR up 130.06% YTD
CRK up 115.20% YTD and still trading at less than half of my current valuation.
EQT up 111.78% YTD
SBOW up 98.40% YTD
RRC up 91.31% YTD.
If you heat your home with propane, I highly recommend that you fill up your tank early and don't wait for it to approach empty before you call your supplier for a refill. Propane inventories are 10% below where they should be at this time of year. Home heating oil inventories are even lower.
Crude oil prices are determined by the global market's fundamentals and there continues to be a lot of "noise" that is very confusing for the paper traders that control the NYMEX Strip. Just remember that the Strip is not a forecast and the "noise" (not the fundamentals) is why it is in backwardation (front month higher than the out months). The global oil market is extremely tight, OECD inventories are very low and OPEC+ is out of spare capacity. That combination is why Goldman Sachs is forecasting that Brent will go to $125/bbl this coming winter.
EOG Resources (EOG) gets an A+ for safety just because of its size and their new dividend policy. EOG's annualized dividend yield is now over 8%. We posted the updated profile to the EPG website late yesterday. PDC Energy (PDCE) also pays a very high dividend.
Callon Petroleum (CPE) is the only one down YTD (-12.76%) at $41.22. I will be reviewing our profile on the company today.
TipRanks: On 8/9/2022 Scott Hanold at RBC Capital (a 5 Star analyst) submitted a new report on CPE. He rates CPE a BUY with a price target of $72.00. So far, Neal Dingmann at Truist Financial and Derrick Whitfield at Stifel Nicolaus have not adjusted their price targets of $95 and $124.
Of the profiles that I've reviewed so far, Comstock Resources (CRK) and Earthstone Energy (ESTE) appear to have the most near-term upside.
> Comstock is almost a pure "gasser" with 98% of their revenues from the sale of dry gas. If HH ngas averages more than $8.00/MMBtu over the next three quarters, the Company could generate close to $2 billion of operating cash flow and $1.3 billion of FCF during the nine months ending 3-31-2023. Those numbers are more than double the cash flow they generated for the full year of 2021.
> Eventually the Wall Street Gang will figure out that Earthstone is now in the 100,000 Boepd Club. If you have not read our updated profile on ESTE, I highly recommend that you do soon. The Company's CEO, Robert Anderson made a very good presentation at the EnerCom Conference last week and I expect to see several of the analysts that attended the conference to upgrade the stock now that the Company has closed the Titus Acquisition.
I will be highlighting our Small-Cap Growth Portfolio in today's podcast.
For the week ending August 12 the Sweet 16 gained 13.57% and is now up 57.33% YTD. It is still trading at an 88% discount to my "Fair Value Estimates" and at less than 3X 2022 operating cash flow; an extremely low valuation multiple for companies of this quality.
I have been publishing the Sweet 16 Growth Portfolio since 2002 and there has only been a few double-digit weekly moves. I really don't know what the portfolio will do next week, but all 16 companies are in great shape. All of them are generating a lot of free cash flow from operations, have lots of "running room" and none of them have near-term debt problems.
The S&P 500 Index gained 2.83% during the week, but it is still down 10.2% YTD.
The Sweet 16 Summary spreadsheet has been posted to the EPG website home page.
We have published updated profiles for AR, CRK, CLR, ESTE, EQT, EOG, MGY, MTDR and RRC. The other 7 profiles are here waiting for my final review. They will all be published in the next few days.
The "Gassers" continue to lead the pack and I expect that to continue. Natural gas inventories are tight and there is nothing that I can see which will allow the utilities to build inventories sufficient for them to safely make it through a colder than normal winter. Miss La Nina and Old Man Winter, with a little help from the LNG exporters are likely to push HH ngas prices over $10/MMBtu within four months.
AR up 130.06% YTD
CRK up 115.20% YTD and still trading at less than half of my current valuation.
EQT up 111.78% YTD
SBOW up 98.40% YTD
RRC up 91.31% YTD.
If you heat your home with propane, I highly recommend that you fill up your tank early and don't wait for it to approach empty before you call your supplier for a refill. Propane inventories are 10% below where they should be at this time of year. Home heating oil inventories are even lower.
Crude oil prices are determined by the global market's fundamentals and there continues to be a lot of "noise" that is very confusing for the paper traders that control the NYMEX Strip. Just remember that the Strip is not a forecast and the "noise" (not the fundamentals) is why it is in backwardation (front month higher than the out months). The global oil market is extremely tight, OECD inventories are very low and OPEC+ is out of spare capacity. That combination is why Goldman Sachs is forecasting that Brent will go to $125/bbl this coming winter.
EOG Resources (EOG) gets an A+ for safety just because of its size and their new dividend policy. EOG's annualized dividend yield is now over 8%. We posted the updated profile to the EPG website late yesterday. PDC Energy (PDCE) also pays a very high dividend.
Callon Petroleum (CPE) is the only one down YTD (-12.76%) at $41.22. I will be reviewing our profile on the company today.
TipRanks: On 8/9/2022 Scott Hanold at RBC Capital (a 5 Star analyst) submitted a new report on CPE. He rates CPE a BUY with a price target of $72.00. So far, Neal Dingmann at Truist Financial and Derrick Whitfield at Stifel Nicolaus have not adjusted their price targets of $95 and $124.
Of the profiles that I've reviewed so far, Comstock Resources (CRK) and Earthstone Energy (ESTE) appear to have the most near-term upside.
> Comstock is almost a pure "gasser" with 98% of their revenues from the sale of dry gas. If HH ngas averages more than $8.00/MMBtu over the next three quarters, the Company could generate close to $2 billion of operating cash flow and $1.3 billion of FCF during the nine months ending 3-31-2023. Those numbers are more than double the cash flow they generated for the full year of 2021.
> Eventually the Wall Street Gang will figure out that Earthstone is now in the 100,000 Boepd Club. If you have not read our updated profile on ESTE, I highly recommend that you do soon. The Company's CEO, Robert Anderson made a very good presentation at the EnerCom Conference last week and I expect to see several of the analysts that attended the conference to upgrade the stock now that the Company has closed the Titus Acquisition.
I will be highlighting our Small-Cap Growth Portfolio in today's podcast.