Sweet 16 Update - May 11
Posted: Sat May 11, 2013 4:38 pm
I have finally updated all of my Sweet 16 individual company Net Income & Cash Flow Forecasts for Q1 results. You can find them under the Sweet 16 (makes sense). All you have to do is log in as an EPG member, click on the Sweet 16 Tab and click on the company you want to check.
The interns are done with their final exams. When they recover from the hangovers, they should be working on updating a bunch of profiles for me. I will be sending them out in e-mails, so check your inbox daily. I know I am preaching to the choir here. We sent our updated profiles on EXXI and XEC last week.
The Sweet 16 is off to a good start. They all reported solid Q1 results and several beat my forecasts. For the group, EPS were $9.90 for the quarter and, based on my models, they should generate approximately $50 EPS for 2013. This compares to $32.81 EPS for 2012. As a group, they are trading at a PE ratio of 12.2 and at just 5.2 X my forecast CFPS for 2013. Those are very low multiples for a group that has double digit production growth locked in.
Year-to-date the Sweet 16 is up 10.2%, which trails the S&P 500 Index that is up 14.6% YTD. This reminds me of 2010. That year we got off to a good start then the portfolio flopped around during Q2 and well into Q3. In September the whole group took off and we finished the year up 42%. If commodity prices hold up, the fund managers will be looking for places to invest and this growth of companies should draw more attention (they will have strong full-year earnings locked in by September). A tightening natural gas market could also be a strong catalyst for this group.
We are almost half way through Q2. Unless there is a large and unexpected dip in oil prices, the Sweet 16 should report even better earnings in Q2. They are all expected to report higher production. The Sweet-16 is still heavily weighted to oil but these companies will get a big boost from higher natural gas prices: CRZO, XEC, EOG, EXXI, GPOR, HP, RRC, SM and UNT.
I was the most impressed by the Q1 results of CLR, EOG and SM. IMO the very public divorce of Harold Hamm, Founder and CEO of CLR, has depressed the share price. With 35% annual production growth and a huge acreage position in the Bakken, it should be up near $120/share. Jim Cramer's favorite is EOG and on this one I agree with Jim. EOG is a Core Holding quality growth stock. SM is off the radar screen for most analysts, but it has a very nice story building in the Eagle Ford and several other regions.
> GPOR reported slightly lower production than I expected, but it should be off to the races now that MWE is rapidly completing GPOR's Utica Shale wells to sales.
> EXXI has struggled but should be reporting a big jump in production this quarter and a nice FYE increase in proven reserves.
> WLL remains the mystery company of the group. How does the number one oil producer in North Dakota stay so cheap? I don't have an answer. Let's just hope Wall Street wakes up to WLL soon.
I will be extremely busy next week. We have the luncheon on Monday, the NEAA luncheon on Tuesday, my Live Chat on Wednesday and I am way behind on a consulting "gig".
Don't forget to register for the "Live Chat With Dan" on Wednesday. You must register to get the "secret code" from Sabrina. Just click on the Calendar Tab to register.
Hang Tough!
The interns are done with their final exams. When they recover from the hangovers, they should be working on updating a bunch of profiles for me. I will be sending them out in e-mails, so check your inbox daily. I know I am preaching to the choir here. We sent our updated profiles on EXXI and XEC last week.
The Sweet 16 is off to a good start. They all reported solid Q1 results and several beat my forecasts. For the group, EPS were $9.90 for the quarter and, based on my models, they should generate approximately $50 EPS for 2013. This compares to $32.81 EPS for 2012. As a group, they are trading at a PE ratio of 12.2 and at just 5.2 X my forecast CFPS for 2013. Those are very low multiples for a group that has double digit production growth locked in.
Year-to-date the Sweet 16 is up 10.2%, which trails the S&P 500 Index that is up 14.6% YTD. This reminds me of 2010. That year we got off to a good start then the portfolio flopped around during Q2 and well into Q3. In September the whole group took off and we finished the year up 42%. If commodity prices hold up, the fund managers will be looking for places to invest and this growth of companies should draw more attention (they will have strong full-year earnings locked in by September). A tightening natural gas market could also be a strong catalyst for this group.
We are almost half way through Q2. Unless there is a large and unexpected dip in oil prices, the Sweet 16 should report even better earnings in Q2. They are all expected to report higher production. The Sweet-16 is still heavily weighted to oil but these companies will get a big boost from higher natural gas prices: CRZO, XEC, EOG, EXXI, GPOR, HP, RRC, SM and UNT.
I was the most impressed by the Q1 results of CLR, EOG and SM. IMO the very public divorce of Harold Hamm, Founder and CEO of CLR, has depressed the share price. With 35% annual production growth and a huge acreage position in the Bakken, it should be up near $120/share. Jim Cramer's favorite is EOG and on this one I agree with Jim. EOG is a Core Holding quality growth stock. SM is off the radar screen for most analysts, but it has a very nice story building in the Eagle Ford and several other regions.
> GPOR reported slightly lower production than I expected, but it should be off to the races now that MWE is rapidly completing GPOR's Utica Shale wells to sales.
> EXXI has struggled but should be reporting a big jump in production this quarter and a nice FYE increase in proven reserves.
> WLL remains the mystery company of the group. How does the number one oil producer in North Dakota stay so cheap? I don't have an answer. Let's just hope Wall Street wakes up to WLL soon.
I will be extremely busy next week. We have the luncheon on Monday, the NEAA luncheon on Tuesday, my Live Chat on Wednesday and I am way behind on a consulting "gig".
Don't forget to register for the "Live Chat With Dan" on Wednesday. You must register to get the "secret code" from Sabrina. Just click on the Calendar Tab to register.
Hang Tough!