Sweet 16 Update as of June 10

[dan_s]

Sweet 16 Growth Portfolio: A spreadsheet showing my updated Fair Value Estimates and First Call's Price Targets has been posted under the Sweet 16 Tab.

The Sweet 16 made a bit of a comeback last week but the portfilio is still down 10% YTD. The group is still 79.2% below my adjusted Fair Value estimates and well below the current First Call Price Targets. If you believe that oil prices will move higher into year-end (which is my forecast) then the Risk/Reward on the Sweet 16 looks extremely good as of today.

If you download the summary of the EPS forecasts you will see that 2nd quarter earnings are actually forecast to be higher than 1st quarter results for 14 of the 16 companies. Mitcham Industries will be down from Q1 due to the annual dip they always have in Q2. MIND is still on-track for the best year in company history. EOG will also be down a bit in Q2 but they hold strong positions in all the major shale oil plays.

As I have posted here before, I think Wall Street may be surprised by stronger than expected results from all of our Bakken companies. Oil was selling at a deep discount to WTI during Q1 but the price corrected in April and Bakken oil was actually selling at a small premium for a couple weeks.

I will be selecting several companies from our Watch List for promotion to the Sweet 16 on July 1st. That is the easy part. The hard choices are which stocks to drop. Obviously, GeoResources (GEOI) goes away but all of the others are still well below Fair Value (IMHO of course).

I am working on an updated company profile for Kodiak Oil & Gas (KOG) that I should have posted in the next couple days. This former Sweet 16 member is poised for significant production growth during the 2nd half of this year.