Sweet 16 Update - December 23

[dan_s]

Our Sweet 16 Growth Portfolio moved higher last week as crude oil prices firmed up.

Gulfport Energy (GPOR) has been leading the way all year. I have updated my forecast model to include the recent acquisition and the company's production guidance. GPOR is setting up for VERY STRONG production growth in 2013 and beyond as the they will be completing close to a dozen new high rate Utica Shale wells per quarter. I have increased my Fair Value Estimate. You can see it on the bottom of the updated forecast model. First Call has increased their price target to $44.08, but I think it has a lot more upside than that.

As a group, the S-16 is trading 53% under my Fair Value Estimate. You can find a table showing my Fair Value Estimate for each company and the First Call Price Targets under the Sweet 16 Tab. I update it each weekend.

SM Energy (SM) made a good move last week but is not even close to my Fair Value Estimate or the First Call Price target of $71.40. The company is focused on increasing oil production but it also gives us very low risk exposure to a lot of natural gas reserves.

For maximum exposure to natural gas, buy Range Resources (RRC). It is now trading 9.5% below where it was when I added it to the S-16 on 10-1-2012, which makes no sense since NG prices are higher and the company is reporting strong operations results.

XEC looks very good to me right now. Read my updated profile. The company has very good stuff in the Permian Basin and Mid-Continient.

HP is up 20% since being added to the Sweet 16 on 10-1-2012. I am concerned that the active onshore rig count continues to fall. However, HP Flex Rigs remain in very high demand. UNT, the other driller in the S-16, looks very attractive at today's price. UNT is really more of an E&P company now.

I plan to move SFY to our new Small-Cap Growth Portfolio on January 1. I still like it but want to have companies with over $Billion in market cap in the S-16.

I will be working most of this coming week, so keep an eye on the website and check under Latest News on the Home Page.

Merry Christmas to all!