Summer Driving Season 10 Days Away
ARD on Sale at $31

Some Facts to Consider

Earnings last 4 quarters: $0.89
PE based on $0.89 = 34

Earnings annualized based on Q1 EPS of $0.25:$1.00
PE based on $1 = 31

My estimated EPS for 2006:$2.33
PE based on $2.33 = 13

FYI: Production in 2006 will more than double that of 2005. Expect oil prices in 2006 to be at least 40% higher than those of 2005. (40% is the magic number. Why? Because people are able to adjust to anything less than 40%. In other words, a steady increase is desired outcome. A spike is not. Obviously a spike could happen.) You are looking at MASSIVE EPS and an operating and net margin that will continue to drift higher. People got excited about investing in internet stocks in the late 90s. Those stocks were valued based not on profits but on sales. That same MANIA will hit oil stocks. However, the difference is the oil stocks have earnings and for some companies like ARD they will be massive. Don't be surprised to see valuations bid into the stratosphere.

Considering that foreign governments will continue the trend of nationalization of their oil industries, stay away from those companies with foreign operations. ARD will get a premium in the form of a higher PE multiple based on fact that it has no foreign operations. Also keep in mind that ARD has no offshore operations. The operations are far enough from the Gulf of Mexico that hurricanes will have NO impact on production. ARD earnings have a HIGH SAFETY PROFILE due to both of these facts.

ARD Long story short: ARD on Sale. Excellent value. Future is bright. Peak Oil. Volatility is normal. The longer you hold, the greater your reward. Tim and Stan doing a marvelous job.