Sweet 16 Update - January 22
Posted: Sun Jan 22, 2017 7:52 pm
Sorry to be getting this posted so late this weekend. Susan & I did not get back from Dallas until 9PM on Saturday.
For the week ending January 20th, the Sweet 16 moved up 1.22% and is now up 1.42% YTD, compared to the S&P 500 Index that is up 1.45% YTD.
As I keep reminding everyone in my weekly podcasts, the price of oil is likely to stay in a tight range ($50-$55) until OPEC + Russia production cuts are confirmed and we see OECD oil inventories falling, which has already started. Very cold winter weather in Europe has drawn on heating oil inventories.
12 of 16 stocks were up last week. RSPP and SM are the only stocks down YTD. I have increased my valuation on both of them. Big gainer last week was Noble Energy (NBL) because their acquisition of Clayton Williams (CWEI) drew a lot of attention to this under-appreciated company. NBL is now one of my Top Picks for 2017.
I still need to update my forecast models for Devon Energy (DVN) and PDC Energy (PDCE). All of the others have been extended through 2018 and can be downloaded from the EPG website.
What's really going to move this group is Q4 results and production guidance for 2017. Year-over-year earnings reports should be "stunning" for this group as we move through 2017. Year-end 2016 reserve reports should draw a lot of attention. More proven reserves will lower DD&A expense going forward.
I usually like to make a few changes to the Sweet 16 at the beginning of the year, but all 16 companies still look like they have a lot of upside to me. EOG Resources (EOG) is the only stock close to my valuation and it stays in the Sweet 16 because it is a "Core of the Core" quality company and it deserves to trade at a higher multiple than what I'm using.
Three companies in our Small-Cap Growth Portfolio (CPE, CRZO and SN) are now big enough to qualify for the Sweet 16. I am extremely bullish on all three. I have extended my Sanchez Energy (SN) forecast through 2018. I value it at $30/share. 100,000 BOE per day production should move the valuation up to $40/share a year from now.
For the week ending January 20th, the Sweet 16 moved up 1.22% and is now up 1.42% YTD, compared to the S&P 500 Index that is up 1.45% YTD.
As I keep reminding everyone in my weekly podcasts, the price of oil is likely to stay in a tight range ($50-$55) until OPEC + Russia production cuts are confirmed and we see OECD oil inventories falling, which has already started. Very cold winter weather in Europe has drawn on heating oil inventories.
12 of 16 stocks were up last week. RSPP and SM are the only stocks down YTD. I have increased my valuation on both of them. Big gainer last week was Noble Energy (NBL) because their acquisition of Clayton Williams (CWEI) drew a lot of attention to this under-appreciated company. NBL is now one of my Top Picks for 2017.
I still need to update my forecast models for Devon Energy (DVN) and PDC Energy (PDCE). All of the others have been extended through 2018 and can be downloaded from the EPG website.
What's really going to move this group is Q4 results and production guidance for 2017. Year-over-year earnings reports should be "stunning" for this group as we move through 2017. Year-end 2016 reserve reports should draw a lot of attention. More proven reserves will lower DD&A expense going forward.
I usually like to make a few changes to the Sweet 16 at the beginning of the year, but all 16 companies still look like they have a lot of upside to me. EOG Resources (EOG) is the only stock close to my valuation and it stays in the Sweet 16 because it is a "Core of the Core" quality company and it deserves to trade at a higher multiple than what I'm using.
Three companies in our Small-Cap Growth Portfolio (CPE, CRZO and SN) are now big enough to qualify for the Sweet 16. I am extremely bullish on all three. I have extended my Sanchez Energy (SN) forecast through 2018. I value it at $30/share. 100,000 BOE per day production should move the valuation up to $40/share a year from now.