Morning Ditch. From today's Barron's, interesting facts on NG stock valuations:
...gas stocks haven't fared well lately because of fears that oil prices will moderate at the beginning of 2001. Because oil is the "captain of the energy market," as Featherston puts it, exploration and production stocks haven't really moved as gas prices have soared. "The index of our gas stocks was 57 in August, when gas prices were $4.50, and it is at 57 now," says Featherston.
At current levels, the stocks, he says, are discounting $2.50 gas. "They don't have to discount $5 gas for next year, they can discount $3.25, which is the price at which these producers earn their cost of capital, and that implies a 35% upside from current levels." |
