Doktor Stocks Recommendation List
Strong Buy:
1. Arena Resources: Ticker Symbol: ARD (Quote) (Chart)
This company has not only production and reserves per share but also a very low cost structure. Management team has proven track record of stellar performance. ARD shares are up from $13 range when I bought my first shares in late July 2005.
ARD 2006 Price Target = $50 This represents a 117% increase from current price of $23. Expect well over $2 in EPS. To be conservative I use $2. This company is growing over 50% per year. I will only provide a P/E multiple of 25 to be conservative. The result is $2 X 25 = $50.
Buy:
2. Ultra Petroleum: Ticker Symbol: UPL (Quote) (Chart)
This company has some of the largest natural gas reserves in the United States in the Wyoming Pinedale Anticline. Their cost structure is the lowest in the industry and their record of increasing production makes this a very attractive investment.
UPL 2006 Price Target = $75 This represents a 44% increase from current price. I expect UPL to post EPS of $2.50 with a P/E multiple of 30 based on expected future growth rate. Growth driven by increased downspacing to 10 and eventually 5 acre spacing on WY properties. Look for increase in proved reserves to also drive price higher.
Doktor Stocks Red Flag List
Strong Sell:
1. GeoResources Inc: Ticker Symbol: GEOI
This particular company has a record of production that is unbeatable. Unfortunately it is a record that is unbeatable in that I have yet to find another oil company with a longer period of continuous declining production. As production declines cost structure will continue to rise. There is little chance of a 2006 capex program to turn this company around.
GEOI 2006 Price Target = $7 This represents a decrease of 14% from current price. Leonardite production facility is no more. Western Star Drilling is break even at best. Oil production is in decline with little expectation for any actual increase YoY. Even with rising oil prices I expect GEOI to fall to $6.50 in 2006 as investors seek oil companies with increasing production and a more favorable cost structure. Decrease in share price is softened by rising oil prices.
Strong Buy:
1. Arena Resources: Ticker Symbol: ARD (Quote) (Chart)
This company has not only production and reserves per share but also a very low cost structure. Management team has proven track record of stellar performance. ARD shares are up from $13 range when I bought my first shares in late July 2005.
ARD 2006 Price Target = $50 This represents a 117% increase from current price of $23. Expect well over $2 in EPS. To be conservative I use $2. This company is growing over 50% per year. I will only provide a P/E multiple of 25 to be conservative. The result is $2 X 25 = $50.
Buy:
2. Ultra Petroleum: Ticker Symbol: UPL (Quote) (Chart)
This company has some of the largest natural gas reserves in the United States in the Wyoming Pinedale Anticline. Their cost structure is the lowest in the industry and their record of increasing production makes this a very attractive investment.
UPL 2006 Price Target = $75 This represents a 44% increase from current price. I expect UPL to post EPS of $2.50 with a P/E multiple of 30 based on expected future growth rate. Growth driven by increased downspacing to 10 and eventually 5 acre spacing on WY properties. Look for increase in proved reserves to also drive price higher.
Doktor Stocks Red Flag List
Strong Sell:
1. GeoResources Inc: Ticker Symbol: GEOI
This particular company has a record of production that is unbeatable. Unfortunately it is a record that is unbeatable in that I have yet to find another oil company with a longer period of continuous declining production. As production declines cost structure will continue to rise. There is little chance of a 2006 capex program to turn this company around.
GEOI 2006 Price Target = $7 This represents a decrease of 14% from current price. Leonardite production facility is no more. Western Star Drilling is break even at best. Oil production is in decline with little expectation for any actual increase YoY. Even with rising oil prices I expect GEOI to fall to $6.50 in 2006 as investors seek oil companies with increasing production and a more favorable cost structure. Decrease in share price is softened by rising oil prices.
posted by -Aztec- at 10:55 AM
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