Sweet 16 Update - Oct 15

[dan_s]

The Sweet 16 lost 5.8% during the week ending 10/14/22, but it is still up 47.00% YTD.

The S&P 500 index lost 0.6% and is now down 24.24% YTD. It has been a very rough year for stocks outside of the Energy Sector.

"The key for markets is if the peak in inflation comes before the Fed has gone too far with rates, which would significantly increase the chances we get a soft economic landing. Falling inflation could also be good for stocks – throughout history, stocks fall as inflation approaches a peak, but they rebound strongly once inflation starts to come down. I think we’re getting close to this point." - Mitch Zacks

FEAR of the FED and a recession is the primary "noise" keeping a lid on oil prices. Natural gas prices should get a boost from an early strong cold wave this week. OPEC+ is committed to supporting oil prices and they are clearly in control. Heating oil shortage around the world should draw a lot more attention this winter and push the oil price higher.

The updated Sweet 16 spreadsheet that shows my current valuation for each stock in the portfolio and how they compare to First Call's price targets has been posted to the EPG website home page. On the spreadsheet I highlighted in yellow my Fair Value Estimates for each stock that I updated last week. I will be updating all of the other valuations this week.

All 16 companies are going to report good Q3 results and all 16 are generating a lot of free cash flow from operations this year.

The "gassers" (AR, CRK, EQT, RRC and SBOW) have been and should continue to lead the pack. ESTE, OVV, NOG and LPI also look like potential doubles for us over the next six months.

My next newsletter (The View from Houston) will be published October 25.

[dan_s]

We had a great time in Tulsa over the weekend at Susan's 50th high school reunion. We still have a lot of friends in Tulsa even though we moved to Sugar Land, Texas 27 years ago.

[SergioSays]

Tulsa looks like a lovely place to live.

[dan_s]

When I graduated from Tulsa University 46 years ago, Tulsa was voted "America's most livable city". Still a nice "town", but seems much smaller to us now after living in the Houston area for 27 years. Winters are rough in Tulsa because it is hilly compared to where we live now. We had at least one bad ice storm each winter.

[marc.wolin@yahoo.com]

When will we have some realistic feedback on REPX flood? First quarter 2023?
Marc Wolin