Price The Market Part 23
Glen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Hi, my name is Glen Bradford. Welcome to my journey of pricing the S&P500 here at the Motley Fool. Let's get at it.
121. HES Corporation (NYSE: HES) is fairly valued at its current price. Since oil and gas presently sport a relatively inelastic demand curve, I'm a fan of this sector if you are looking to recession proof your portfolio. Analyst targets are all over the map here from $68 at Deutsche Bank to over $100 at Barclays Capital. I'm more on the side of Barclays but I wouldn't say that I'm nearly as optimistic. Barclays apparently is forecasting another 2008 in terms of oil price spikes. You never know, they could be right. Things are heating up in Iran. Target Price: $55-$70. I see this raging over $100 if the Straight of Hormuz is closed.
122. FMC Technologies, Inc (NYSE: FTI) is cresting all time highs. I think that their price reflects a lot of their future expectations and can say that I'm not a fan of buying at this price. Over the next several years, I expect them to produce subsea equipment for ongoing drilling off the coast of Africa. With my target price being $40-$50, this is a company that I'd stay away from for the time being, not to mention that FMC isn't kicking off any dividends at present. In today's investing climate, I like the idea of dividends and this one just doesn't have it.
123. Halliburton Company (NYSE: HAL) looks to be undervalued. This is a company that is poised for a jump in the future. All indicators point to the oil market continuing to stay strong. Although there is a strong political push for alternative energy sources, these are years away from becoming a part of everyday life. Not only is Haliburton strong in the oil industry, I really like that they have `two hands` deeply embedded in natural gas as well. You may not see short term gains but it will pay off in the long run. With the price just over $35, this is one that should be jumped on now to see the long term payoffs. Target: $35-$45.
124. Helmeric & Payne (NYSE: HP) is not getting the respect it deserves as it looks cheap to me. They have seen a 58% increase in capital expenditures. Apparently this is appearing unattractive to most even though these expenses have been allocated mostly to the production of new rigs to satisfy a newer market in the US. Their increased demand from the Bakken Shale and Eagle Ford Shale is giving them the opportunity to provide some of the most innovative and specialized oil rigs. This company is attractive and I believe will be making a steady climb here in the not so distant future. The dip down below $40 leaves value investors like myself chomping at the bit for more. Target: $60-$70.
125. Devon Energy Corp. (NYSE: DVN) has made large strides in the Canadian Oil Sands. They also have stake in 50% of the Kirby-Pike oil sands. Their biggest strides in oil extraction have recently been in the Eagle Ford Shale where their output has seen much better numbers than they had initially projected. This doesn't surprise me. In the third quarter they have seen a 17% rise in their output of gas and oil, Cha-Ching. The latest drop in price is simply an opportunity for the patient. I also do not want you to overlook their offshore work. This is a must buy. Target: $65-$75.
Extra: Mike sent in Enstar Group, LTD (NASDAQ: ESGR) advising that it is trading at 6x EPS with 20%+ ROE. Goldman Sachs just bought at $86 a share with warrants. The warrants kick in at $115. As such, I'd definitely be selling by there. I'm not seeing this as a P/E of 6, more like P/E of around 10. Target: $95-$105. Their ROE is pretty high because of how leveraged they are. This is buyable at this price. If you like Enstar, take a look at Solar Capital and Full Circle Capital. I view them as the same except these kick out a dividend and Full Circle is likely cheaper.
That's all for now. If you want me to value your company, email me at globalspeculation at gmail.com
Glen Bradford holds no position in any of the companies mentioned.