Sweet 16 Update - March 24

[dan_s]

Sweet 16 Growth Portfolio: A spreadsheet showing my estimated Fair Value for each company in the S-16 compared to the current First Call price target is available under the Sweet 16 Tab.

One thing I watch very carefully is the movement of the First Call price targets for each company in the portfolio, especially in the weeks following an earnings release. As I posted here a few weeks ago, I was very concerned with Carrizo Oil & Gas (CRZO). In fact, I was very close to dropping them from the S-16. Since then, the company posted outstanding 4th quarter results. Since the earnings release the First Call price target has moved up and it is now approaching my Fair Value estimate for the stock. The company is going to report a big jump in their liquids production during the 1st quarter.

Energy XXI (EXXI): There is still a huge gap between my Fair Value estimate and the First Call price target, despite the fact that First Call's EPS estimates have increase significantly and are now actually higher than what I have in my forecast model. IMO all of the analysts are waiting until test results for the Davy Jones well are released by MMR.

EOG's share price dipped last week. First Call's price target is $128.23 and mine is much higher. EOG is completing some very good Eagle Ford wells this quarter.

Two of this year's drops now look like great buys. Patterson-UTI (PTEN) is trading at less than 3X this year's cash flow per share. Petrominerales (PMGLF) is trading at less than half my Fair Value estimate and well below the First Call price target of $28.35. Petrominerales and Sweet 16 member Gran Tierra (GTE) are both almost pure plays on oil and they have incredible exploration upside. GTE is debt free.