Sweet 16 Update - April 27

[dan_s]

I just posted my Sweet 16 Growth Portfolio spreadsheet under the Sweet 16 Tab:
> Tab 1 of the Excel spreadsheet is a summary of my earnings and cash flow forecasts for each company,
> Tab 2 shows my Fair Value Estimate compared to First Call's Price Target for each company as of 4-27-2013.

As a group, the portfolio has drifted lower the last two weeks (up just 5% YTD), primarily a result of the recent dip in oil prices.

HP, RRC and WLL have reported strong 1st quarter results. If you are new to our group, you need to know we ignore GAAP earnings and focus on cash flows. RRC reported a loss because of the mark-to-mark adjustments on their hedges. The accounting rules for hedges is ridiculous (an over-reaction to Enron by the SEC) and very confusing for investors. Just believe me, RRC had a great quarter and they are locked in for a great year. RRC is getting a HUGE boost from increasing natural gas prices and they have more than 20% annual production growth locked in for years.

I am expecting very strong Q1 results from XEC and EOG. IMO they are both Screaming Buys at today's price. EOG is now down for the year! EOG has over 1.3 bcf per day of gas production. Think about the boost they will get to the bottom line if NG prices keep moving higher, which they will.

First Call's price target for Gulfport Energy (GPOR) continues to drift up toward my Fair Value Estimate of $62/share. Gulfport will report just a small increase in production from Q4 to Q1, but production will be taking off as MWE will be hooking up a lot of Gulfport's Utica Shale wells to their system this quarter. GPOR's production should double from Q1 to Q2 and ramp up to over 30,000 boepd by year-end.

Unit Corp (UNT) is another one that the market just doesn't get. They will get a big boost from increasing gas prices. UNT is a rapidly growing E&P company that the market thinks is a drilling services company. All it will take is a few fund managers to figure this one out.

Keep an eye on Concho Resources (CXO). They report Q1 results on May 1. If the report is as good as I am expecting, CXO will be in the Sweet 16 very soon. KOG is the most likely company to be dropped, but I think Kodiak is going to report a decent quarter. I may put CRZO in the Small-Cap Growth Portfolio, just because of its size. I love CRZO's potential and exposure to natural gas.

Hang tough, we have a lot of reports in the works with all of our favorite companies reporting Q1 results over the next two weeks.

We are getting some much needed rain in Sugar Land, Texas. Have a good weekend.