Sweet 16 Update as of April 6

[dan_s]

The Sweet 16 Growth Portfolio spreadsheet has been posted under the Sweet 16 Tab
> Tab 1 is a summary of my EPS and CFPS forecasts,
> Tab 2 shows my Fair Value Estimate compared to First Call's Price Target for each company as of 4-6-2013

The Sweet 16 is up 7.8% YTD.

I met with Energy XXI (EXXI) on April 2. The company's fiscal 3rd quarter results should be about the same as Q2. Over the next six months they expect to ramp up oil production by 10,000 bopd with gas production staying about the same. The spike in production is coming from their horizontal development well program. Four HZ wells are being completed in April. The company is currently selling their oil at a $4/bbl premium to Brent. Energy XXI also has 90,000 mcfpd of natural gas production that sells at a premium to NYMEX. My Fair Value Estimate (break-up value) is $53.40, compared to First Call's price target of $39.57.

Continental Resources (CLR) share price has pulled back on concerns over the CEO's divorce. IMO this should have no impact on the company's operations. Harold's wife would be an excellent addition to the board. I am expecting some very encouraging results from CLR's SCOOPs drilling program in Oklahoma when they report Q1 results.

Gulfport (GPOR) and Helmerich & Payne (HP) were the only stocks that moved higher this past week. The Sweet 16 is heavily weighted to oil, so a pullback with lower oil prices is expected. First Call's price target for GPOR continues to drift higher and it is now very close to my Fair Value estimate of $62/share. GPOR has made it clear that their Q1 production will be just slightly higher than Q4. We may see a bit of a pullback if some investors are expecting a big spike in production. The big jump should come in Q2 and Q3. Buy the dips if you don't own GPOR already.

Unit Corp. (UNT) is now down 4.2% YTD, which makes no sense. This company will get a big boost from higher natural gas prices.

The companies that will get the most bang from higher gas prices are RRC, UNT, CRZO, EOG, XEC and SM.

Former Sweet 16 member Newfield Exploration (NFX) reported a major gas discovery in Asia last week. The Asian gas market is the best in the world. NG traded for $14 to $18 per mmbtu in the first quarter in Asia. First Call's Price Target for NFX is $35.65, which looks reasonable to me. I updated my forecast model and posted it under the Watch List Tab.

Companies in our Small-Cap Growth Portfolio that will get a nice boost from increasing gas prices: CRK, AREX, SARA and SFY. Read our new profile on Saratoga Resource (SARA), I think the stock is grossly oversold. Wall Street is still very risk adverse these days and small-caps do have more risk than our Sweet 16 mid-caps so they can remain undervalued for a long time. Assuming commodity prices hold up, all of the small-caps in our portfolio are trading at very attractive multiples but it is difficult to know when this group will draw more investor attention. This month we will publish profiles on ENRJ, MIND, OEDV and TPLM.