Sweet 16 Update - Nov 26
Posted: Sat Nov 26, 2016 2:35 pm
The Sweet 16 had a good week. It was up 3.41% for the week and is now up 46.56% YTD.
The "Trump Rally" continued and the S&P 500 Index was up 1.54% for the week and is now up 8.29% YTD.
My valuations for each Sweet 16 company's common stock and First Call's price target for each company can be found on Tab 2 of the Sweet 16 spreadsheet, which is updated each weekend.
This morning I updated my forecast/valuation model for Pioneer Natural Resources (PXD). I am increasing my valuation by $4.00/share to $209.00. This compares to First Call's price target of $214.63. As I posted earlier, Wall Street is head-over-heals in love with the Permian Basin and PXD is definitely a leading company in West Texas. We will be sending out an updated profile on PXD late today. PXD is reporting outstanding completed well results using more enhanced completion designs with a lot more sand. I am eager to see their year-end reserve report.
If you are retired or near retirement age, the bulk of your Energy Sector portfolio should be in high quality companies like our "Elite Eight". The upstream oil & gas business is risky. Don't bet the farm on small-caps hoping they hit the "Big One". Size matters in this business, primarily because large-caps have more access to capital. This is a VERY CAPITAL INTENSIVE BUSINESS.
It now looks like Mother Nature will deliver a very good December for our "gassers". Gulfport Energy (GPOR) has the most upside if we get a spike in natural gas prices. Antero Resources (AR) trades at a deeper discount to my valuation, but with all of their gas hedged, it won't get a revenue boost from higher gas prices this winter. Range Resources (RRC) is the #1 natural gas company in America and the safest bet if you want to add more exposure to gas.
All of the Sweet 16 produce a mixture of oil, natural gas and NGLs. You can find their production mix at the bottom of my forecast models for each company. Their proven reserve mix is broken out on tab 2 of the Sweet 16 spreadsheet.
Oil Prices: The price will continue to flop around in the $45-$50 range until OPEC announces their agreement to curb production on November 30. It is anyone's guess what the agreement will look like, but my SWAG is that they will announce a goal of holding production at around 33.0 million bbls per day. That should be enough to push oil to $55-$60 range.
Natural Gas Prices and NGL Prices are based on supply/demand fundamentals in regional markets and for the most part are disconnected from oil prices. Low oil prices actually helped tighten the gas and NGL markets. A cold winter will push these prices higher.
I do apologize for taking so long to get all of the Sweet 16 profiles updated for Q3 results. I have updated my forecast models for each company. Family business related to my father's death has taken up a lot more of my time than I thought it would. My goal is to get the newsletter and a lot of profiles done next week.
The Stars Are Beginning to Align for a very good December.
The "Trump Rally" continued and the S&P 500 Index was up 1.54% for the week and is now up 8.29% YTD.
My valuations for each Sweet 16 company's common stock and First Call's price target for each company can be found on Tab 2 of the Sweet 16 spreadsheet, which is updated each weekend.
This morning I updated my forecast/valuation model for Pioneer Natural Resources (PXD). I am increasing my valuation by $4.00/share to $209.00. This compares to First Call's price target of $214.63. As I posted earlier, Wall Street is head-over-heals in love with the Permian Basin and PXD is definitely a leading company in West Texas. We will be sending out an updated profile on PXD late today. PXD is reporting outstanding completed well results using more enhanced completion designs with a lot more sand. I am eager to see their year-end reserve report.
If you are retired or near retirement age, the bulk of your Energy Sector portfolio should be in high quality companies like our "Elite Eight". The upstream oil & gas business is risky. Don't bet the farm on small-caps hoping they hit the "Big One". Size matters in this business, primarily because large-caps have more access to capital. This is a VERY CAPITAL INTENSIVE BUSINESS.
It now looks like Mother Nature will deliver a very good December for our "gassers". Gulfport Energy (GPOR) has the most upside if we get a spike in natural gas prices. Antero Resources (AR) trades at a deeper discount to my valuation, but with all of their gas hedged, it won't get a revenue boost from higher gas prices this winter. Range Resources (RRC) is the #1 natural gas company in America and the safest bet if you want to add more exposure to gas.
All of the Sweet 16 produce a mixture of oil, natural gas and NGLs. You can find their production mix at the bottom of my forecast models for each company. Their proven reserve mix is broken out on tab 2 of the Sweet 16 spreadsheet.
Oil Prices: The price will continue to flop around in the $45-$50 range until OPEC announces their agreement to curb production on November 30. It is anyone's guess what the agreement will look like, but my SWAG is that they will announce a goal of holding production at around 33.0 million bbls per day. That should be enough to push oil to $55-$60 range.
Natural Gas Prices and NGL Prices are based on supply/demand fundamentals in regional markets and for the most part are disconnected from oil prices. Low oil prices actually helped tighten the gas and NGL markets. A cold winter will push these prices higher.
I do apologize for taking so long to get all of the Sweet 16 profiles updated for Q3 results. I have updated my forecast models for each company. Family business related to my father's death has taken up a lot more of my time than I thought it would. My goal is to get the newsletter and a lot of profiles done next week.
The Stars Are Beginning to Align for a very good December.