Sweet 16 Update - October 4
Posted: Sat Oct 04, 2014 11:52 am
The Sweet 16 Growth Portfolio spreadsheet has been updated and posted to the website (Sweet 16 Tab):
> Tab 1 of the spreadsheet is a summary of the EPS and CFPS forecasts,
> Tab 2 shows my Fair Value Estimate compared to First Call's Price Target for each company as of 10-4-2014
The Sweet 16 was down 8.72% this week, the worst week I can remember. The Sweet 16 is now up just 6.93% year-to-date, compared to the S&P 500 Index which is up 6.47%. Somewhat interesting (to me at least) is that there were more increases in First Call Price Targets last week than decreases (six up and only two down).
Obviously, this sector is out of favor due to falling oil prices, the ISIS crisis, Ebola, Hong Kong, etc. "The Sky is Falling", to quote our friend Chicken Licken.
My Fair Value Estimates won't change until I see 3rd quarter results and what the companies have to say about future production and their costs. 3rd quarter results will be very good and "reported earnings" will crush the First Call EPS forecasts for most of the companies because they will include some very large mark-to-market positive adjustments on oil hedges. Remember that (because we are smarter) we focus on (1) cash flow per share and (2) production and reserve growth. "Adjusted Earnings" are what should be compare to First Call's EPS forecasts.
The next edition of The View From Houston, to be published on 10/7/2014, will include more thoughts on individual companies.
> Tab 1 of the spreadsheet is a summary of the EPS and CFPS forecasts,
> Tab 2 shows my Fair Value Estimate compared to First Call's Price Target for each company as of 10-4-2014
The Sweet 16 was down 8.72% this week, the worst week I can remember. The Sweet 16 is now up just 6.93% year-to-date, compared to the S&P 500 Index which is up 6.47%. Somewhat interesting (to me at least) is that there were more increases in First Call Price Targets last week than decreases (six up and only two down).
Obviously, this sector is out of favor due to falling oil prices, the ISIS crisis, Ebola, Hong Kong, etc. "The Sky is Falling", to quote our friend Chicken Licken.
My Fair Value Estimates won't change until I see 3rd quarter results and what the companies have to say about future production and their costs. 3rd quarter results will be very good and "reported earnings" will crush the First Call EPS forecasts for most of the companies because they will include some very large mark-to-market positive adjustments on oil hedges. Remember that (because we are smarter) we focus on (1) cash flow per share and (2) production and reserve growth. "Adjusted Earnings" are what should be compare to First Call's EPS forecasts.
The next edition of The View From Houston, to be published on 10/7/2014, will include more thoughts on individual companies.