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

To: JoeinIowa who wrote (23126)	12/26/2000 11:03:41 PM
From: JoeinIowa	Respond to of 29382

CHK sells at around two times 2001 cash flow. Should still have some room left to run. Hope it has not run out of gas. -------------------------------------------------------------------------------- Natural Gas Stocks on Fire Again -- 2:00 PM EST by Dan Dorfman NEW YORK (JAGfn.com)--Call it the sweet scent of natural gas. Or, in Wall Street parlance, the sweet scent of money. Those natural gas stocks, which have wowed 'em this year with a gain of about 47%, as measured by S & P's natural gas stock index, are on fire again today with several streaking to new 52-week highs. Here's a brief rundown. Murphy Oil (MUR), is up 3 3/8 to 59 5/16; Devon Energy (DVN), up 5 to 61.81; Noble Affiliates (NBL), 46 9/16, up 5 3/8; Kerr-McGee (KMG), 64 5/8, up 2 1/2; Burlington Resouces, (BR), 51 13/16, up 2 9/16; Apache (APA), 69 7/16, up 5 5/16, and Anadarko Petroleum (APC), 71.92, up 7.02. Meanwhile, January natural gas futures, largely reflecting tight near-term supplies, are trading up at $9.64, nearly about quadruple last year's price, after reaching a new contract high of $10 in intraday trading. Likewise, the Amex index of natural gas stocks also climbed to its highest level ever today. At least one prominent energy tracker, veteran analyst Eugene Nowak of ABN-AMRO, thinks the run in natural gas stocks is far from over. Another out-performance is his expectation in the year ahead. "Investors have to be ready for volatility, but they should be overweighted in the natural gas sector in 2001," he tells my colleague Amie Guentner. His rationale: --Good demand. --Low and rapidly declining inventories. --Continued deliverability constraints. They all add up to what Nowak sees as a robust price outlook into 2002. And so he is increasing his U.S. natural gas composite wellhead price forecasts from $3.90 to $4 per mcf (thousand cubic feet) in 2000 and from $4.10 to $4.70 in 2001. For 2002, he is sticking with his price forecast in $3-$3.25 per mcf (million cubic feet) range. Another near-term plus for natural gas prices: skidding temperatures. Nowak observes that colder-than-normal weather in major consuming markets suggests further meaningful inventory drawdowns of natural gas. Continuing sizeable reductions throughout the heating season, he says, could deplete inventories at winter's end to unusually low levels that should be supportive of firm prices in the spring and beyond. Nowak further points out that the latest data from the Canadian Gas Association show Canadian natural gas inventories down 24 bcf (billion cubic feet) to 64.4% full, compared to 81% full at the same time last year. Yet a longer-term plus for natural gas is the large number of planned new gas-fired electric generating facilities. Demand for natural gas in this sector has increased this year by about 12% as a total of 20,000 megawatts of gas-fired capacity was brought on stream. Another 70,000 megawatts is due to come on stream over the next 2 1/2 years. Nowak's top natural gas play is Kerr-McGee a major diversified energy company. His rationale: --Great oil and gas discovery record. --Exposure to new discoveries of oil and gas especially in deepwater- Gulf of Mexico. --Strong chemical business, accompanied by rising earnings. --Low valuation (selling at just over four times next year's estimated cash flow). Nowak's price targets on Kerr-McGee--which is already up sharply from its 52-week low of 39 7/8--are 77 in 6-12 months, and 85 in 12-18 months.