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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Galirayo who wrote (22268)	11/20/2000 2:29:36 PM
From: JoeinIowa	Read Replies (1) \| Respond to of 29382

Still Time to Gas up on Natural Gas -- 2:00 PM EST by Dan Dorfman NEW YORK (JAGfn.com)--The thrust of this report: It's still not too late to play a winner. Or put another way, gas 'er up! No, not your car, but your portfolio. The gas I'm talking about is not the fuel, but natural gas stocks. Yes, you're right. They're not undiscovered, with the industry's six leading lights averaging a 45% gain so far this year. Still, Eugene Nowak, the veteran well-regarded energy analyst of ABN AMRO, sees more mileage ahead for these stocks. The reason he's so gung-ho: His expectations of higher natural gas prices both over the short and long term. Solid fundamentals are in place for a continued robust pricing environment, he says. Over the short term, he believes natural gas prices will remain high because of relatively low inventories (9% lower than last year), limited deliverability improvement, the seasonal increase in demand and expectations of a colder winter this year. We have just entered the start of the winter heating season and U.S. natural gas inventories remain on the low side. These inventories reached 2.748 trillion cubic feet heading into the winter season. Although believed to be adequate, U.S. natural gas inventories are 0.259 trillion cubic feet below last year's levels, and about the same amount below the 3-year average inventory level, observes Nowak. As of Nov. 3, 2000 storage was 83% full, verses 90% last year. Over the long term, Nowak expects prices to continue to remain robust due to the prospects of continued strong demand and a relatively limited resource supply base. As a result of his bullish pricing outlook he has increased his 2000 and 2001 natural gas price forecasts to $3.75 per MCF (thousand cubic feet) for both years from $3.60 and $3.50 per MCF, respectively. He continues to project natural gas prices of $3-$3.25 per MCF in 2002. Natural gas is currently going at $6.30 per MCF. So how do you play the stocks? Nowak's top choice is Kerr-McGee (KMG), which he notes is one of the companies most leveraged to natural gas prices. He rates it the highest quality natural gas play, though the company is not solely a natural gas company. Its stock is currently trading at 65 5/16 and Nowak sees it rising to 77 in the next six to 12 months and to 85 beyond that. Another favorite is Murphy Oil (MUR). His outlook for Murphy, which is trading at 58 15/16, calls for a jump to 68 over the next 6 to 12 months. Nowak is also enthusiastic about four other natural gas plays, whose stocks he sees climbing 30%-35% over the next six months. They are Anadarko Petroleum (APC), 66.20, Apache Corp. (APA), 60 5/8, Noble Affiliates (NBL), 40 5/16 and Burlington Resources (BR), 42 3/16. Nowak, incidentally, believes that major oil company shares, despite some nice runups this year, are currently undervalued as they sell at a greater-than-historical price-to-earnings discount to the general market. His three favorites are Chevron (CHV), 84 3/8, Kerr-McGee and Exxon Mobil (XOM), 91 5/8. * * *