Editor’s Note: A few days ago, I received a call from a longtime subscriber asking if Roger Conrad and I plan to host a dinner at this year’s World MoneyShow Orlando, which takes place Feb. 9-12, 2011, at The Gaylord Palms Hotel & Convention Center. This call got me thinking: It’s been two years since we hosted such an event at the show, and frankly, I miss those dinners.
Roger Conrad, Ben Shepherd and I decided to book a table for the evening of Thursday, Feb. 10 in The Gaylord Palms’ Old Hickory Steakhouse. For those of you who are familiar with the hotel from years past, Old Hickory is restaurant that resembles a tree house and is located near the lobby. The steakhouse serves some choice cuts of meat, and we felt it was a more appropriate venue than the restaurant that looks like a pirate ship.
For those interested in joining us, the dinner costs $299 per person and includes wine, drinks and a four-course meal. This will be a small event, so seats are limited. To book your place at the table, call Customer Service at 1-800-832-2330 and ask for Special Offer O01595.
In the Sweet Spot
Oil services firms are entering a sweet spot this year. West Texas Intermediate (WTI) crude oil continues to trade at roughly $91, while Brent crude has topped $100 per barrel.
Meanwhile, US economic growth has accelerated in recent months, making my forecast of 3 percent growth appear too conservative. Oil demand in developed countries has surprised to the upside since the third quarter of 2010. This trend should continue in the new year.
In this issue, we’ll analyze fourth-quarter results and commentary from Wildcatters Portfolio holding Schlumberger (NYSE: SLB). This recent earnings report and conference call highlighted several key trends for 2011. Readers will have the opportunity to discuss fourth-quarter results and my outlook for 2011 in my next Live Chat session, which will take place on Feb. 8, 2011, at 2:00 p.m. EST.
In This Issue
With oil prices on the rise and the US and global economies in growth mode, the energy sector is entering its earnings sweet spot. Oil services names are one of the best ways to play this recovery. See Oil Tops $100.
Wildcatters Portfolio holding Schlumberger‘s (NYSE: SLB) fourth-quarter results and conference call offered plenty of inisght into key oil services markets, including onshore North America, the deepwater Gulf of Mexico and beyond and international markets. See Fourth-Quarter Insights.
Want to know which stocks to buy now? Check out the Fresh Money Buys list. See Fresh Money Buys.
Halliburton (NYSE: HAL)—Hold in Energy Watch List
EOG Resources (NYSE: EOG)—Buy < 115
Oasis Petroleum (NYSE: OAS)—Buy < 31
Schlumberger (NYSE: SLB)—Buy < 85
Weatherford International (NYSE: WFT)—Buy < 26
Petroleum Geo-Services (Oslo: PGS, OTC: PGSVY)–Buy < USD16
West Texas Intermediate (WTI) crude oil continues to trade in the low $90s per barrel, but Brent crude oil provides a clearer picture of global supply and demand. The delivery point for WTI–Cushing, Okla.–faces a glut of oil after a new pipeline began transporting crude to the area and some unplanned refinery outages boosted the amount of oil in storage. Despite this regional oversupply, US oil and refined-product (gasoline, diesel and jet fuel) inventories have declined sharply since September.
Source: Energy Information Administration
This graph tracks changes in US oil and refined-product inventories between the end of August and the end of December for each year going back to 1990. In 2010 US inventories declined by almost 80 million barrels. This reduction represents more than three times the five-year average inventory drawdown over this period.
This trend points to two major forces at work in US oil markets: slumping imports and surging demand. The decline in imports likely reflects rising oil demand in emerging markets, coupled with tighter supplies in these regions–a combination that attracts additional imports. At the same time, an accelerating US economy also bolstered oil demand, further drawing down inventories.
Short-term corrections aside, the supply and demand picture should remain tight throughout 2011. Either OPEC will need to supply more oil or prices will rise to a level that cools demand growth.
OPEC appears to be comfortable with oil prices at $100 per barrel. If OPEC boosts output, its spare capacity–the amount of idled production that can be readily brought online–will fall by a commensurate amount. Such production increases historically have been bullish for prices, as investors fret about falling spare capacity.
Rather than watching WTI, investors should monitor Brent crude oil, a key international benchmark that typically trades at a $1 to $2 per barrel discount to WTI because it’s a slightly inferior grade. Recently, Brent crude oil has commanded a premium of more than $10 per barrel.
Brent crude oil isn’t the only variety that currently trades at an unusual premium to WTI. As you can see, WTI is also priced at a discount to Light Louisiana Sweet crude oil, another key US benchmark.
Brent crud prices also benefit from growing demand in emerging markets such as China and India. Rising consumption in international markets tends to register in Brent prices before it affects WTI; the supply overhang in Cushing has extended this lag. WTI eventually will catch up to Brent and LLS, but a few more weeks may pass before it makes its move.
With emerging markets continuing to drive demand for crude oil, Brent will be an increasingly important benchmark for US investors. At present, Brent crude oil trades well north of $100 per barrel.
As I explained in the Jan. 25, 2011, issue of The Energy Letter, Oil: $100 Isn’t a Magic Price, investors shouldn’t regard $100 oil as a magic number that will instantly kill global demand. This price threshold may be psychologically important for investors, but rising oil prices haven’t prompted US consumers to shy away from buying trucks and SUVs: Sales of these gas-guzzling vehicles have actually increased relative to cars.
In 2008 demand destruction didn’t occur until oil reached $115 to $120 per barrel, a price range I expect crude to hit at some point in 2011.
Energy-focused investors should also pay close attention to US and global economic growth. My Road Map for 2011 called for US gross domestic product (GDP) to grow roughly 3 percent in 2011, but the latest economic data suggest that this forecast may prove conservative. Check out the latest reading of the Institute for Supply Management’s purchasing managers index (PMI) for manufacturing.
In my experience, investors are better off focusing on a handful of economic indicators that have a reliable track record of forecasting economic conditions. With the welter of economic data that’s available, pundits can always find some piece of evidence to support their convictions. But cherry-picking economic data to support your preconceptions doesn’t produce results.
PMI and the Conference Board’s Index of Leading Economic Indicators are two of my favorites. Neither indicator is perfect, but both have a solid track record of predicting major shifts in the US economy.
Manufacturing PMI is a diffusion index: Readings over 50 indicate expansion; readings below 50 indicate contraction. Historically, readings below 47 to 48 suggest that the US economy is at risk of tipping into recession. PMI breached 60 in January, trumping consensus expectations that called for a modest increase to 58. Readings greater than 60 are rare a rare occurrence. In the 542 months since the end of 1965, PMI has exceeded 60 on only 55 occasions: The index spends 90 percent of its time below 60.
The latest PMI number suggests strong expansion in manufacturing activity and GDP growth of nearly 4 percent. That’s bullish for energy prices. If economic growth continues at this pace, US energy demand could surprise to the upside in the first half of 2011.
Although stocks will suffer short-term pullbacks like the one that occurred in January, the energy sector is entering a sweet spot of growth right now. For my timeliest picks, check out the list of Fresh Money Buys at the end of this issue.
Fourth-quarter earnings season is arguably the most important time of the year for investors because companies often share their outlook for the coming year. The Big Four oil services companies–Halliburton (NYSE: HAL) and Wildcatters Portfolio holdings Baker Hughes (NYSE: BHI), Schlumberger (NYSE: SLB) and Weatherford International (NYSE: WFT)–are typically among the first energy-related companies to report quarterly results.
Each quarter, I spill considerable ink analyzing results from Schlumberger each because the company has an unparalleled view of what’s going on in energy markets worldwide. Schlumberger operates in every conceivable energy-producing country and works with producers of all sizes.
In addition, CEO Andrew Gould tends to flag key trends during the conference calls that follow the company’s quarterly release. His musings on the industry as a whole are often correct and are a good source of investment ideas. The company’s recent fourth-quarter results and conference call were no exception.
Schlumberger (NYSE: SLB)
- Drilling activity remains robust in North America. Services firms have raised prices, but profit margins and pricing power should fade in the second half as new capacity enters the market.
- International profit margins look should rise this year as activity picks up and absorbs excess capacity.
- Activity in the Gulf of Mexico won’t recover quickly from the Macondo oil spill and drilling moratorium, but strong growth in other deepwater markets will pick up the slack.
- Producers plan to spend more on exploration, a key business area for Schlumberger.
Schlumberger reported solid results for the fourth quarter of 2010. Revenue in its Oilfield Services division was up 9 percent sequentially, and the WesternGeco seismic services unit grew revenue 17 percent from the third quarter.
Management estimates that one-quarter of the revenue growth in its Oilfield Services businesses stemmed from seasonal factors–customers rush to use up their annual budgets at the end of the year. But the North American market was once again the star of the quarter, particularly activity in US shale oil and gas fields.
Drilling activity remained robust in these plays, and Schlumberger reported a 658 basis point (6.58 percent) jump in pre-tax operating margins in North America. About 2 percent stemmed from a one-off gain relating to a project in the Bakken Shale play of North Dakota and Montana. But the remaining 4.5 percent increase in margins indicates that Schlumberger was able to raise the prices it charges for services related to unconventional oil and gas plays.
The Bakken and other liquids-rich shale plays were a focal point for producers in the fourth quarter, a trend we discussed at great length in the Oct. 20, 2010 issue A Rough Guide to Shale Oil. At current oil prices, Bakken producers such as Gushers Portfolio holding Oasis Petroleum (NYSE: OAS) can generate returns in excess of 100 percent on capital invested.
That being said, the wells drilled in the Bakken and other shale plays are much more complex and service-intensive than traditional onshore wells. Producers have found that long horizontal wells–“long laterals” in industry parlance–and huge multistage fracturing jobs maximize output from shale deposits.
For example, in the Bakken producers routinely drill laterals that exceed 10,000 feet in length, a distance of nearly two miles. Plenty of producers do fracturing jobs in more than 30 stages, and a few are contemplating fracturing projects of 42 stages or more. As technology and drilling techniques evolve, output and efficiency continue to improve. For those unfamiliar with hydraulic fracturing and horizontal drilling, check out the Jan. 19, 2011, issue Small Is Beautiful.
Services companies handle all of the directional drilling and fracturing work needed to produce these fields. As activity in shale oil and gas plays picks up, Schlumberger and other services companies reap the benefits. Demand for pressure pumping and other services is so high that these firms have been able to push through price increases. It’s simple supply and demand.
Schlumberger’s fourth-quarter earnings release and conference call included some useful insights into the North American market. The company has less exposure to North America than most of its rivals, and much of its business in the region came from the deepwater Gulf of Mexico.
Having listened to Schlumberger’s quarterly conference calls for over 10 years, I’ve found that management tends to be a bit more bearish in its commentary about US and Canadian onshore markets than its competitors. It’s possible that management feels it can speak frankly about emerging trends in the region because it has less business at stake. Also, management’s calls on shifts in the North American market tend to be a bit early, though they usually prove correct.
Management expects North American activity and margins to remain strong through midyear, but noted that margins could decline at some point in the second half of 2011.
Weak natural gas prices should prompt producers to curtail activity in dry-gas fields such as the Barnett Shale and Haynesville Shale. On the other hand, elevated crude oil prices should ensure that drilling continues apace in the Bakken and other shale oil plays. In addition, some natural gas fields–for example, the Eagle Ford Shale in southern Texas and the Marcellus Shale in Appalachia–athat re rich in natural gas liquids (NGL) should also remain strong.
The prices of most NGLs–hydrocarbons such as ethane, propane and butane that are sometimes produced alongside natural gas–track oil prices.
The petrochemical industry relies on NGLs as a feedstock for plastics and other products, while refiners use butane and isobutene. Propane is used primarily for heating or fuel. Some investors have expressed concern that a surge in NGLs production from plays like the Marcellus and Eagle Ford would lead to a glut and depress prices, but that hasn’t happened.
As you can see, NGL prices tend to track the value of crude oil rather than natural gas. A barrel of mixed NGLs–a combination of ethane, propane and butane–currently trades at a little more than $53 per barrel, or about 60 percent of the price that a barrel of West Texas Intermediate crude commands. Over the past three years, a barrel of mixed NGLs has fetched an average of 57 percent of the price of a barrel of oil; in today’s market, the value of NGLs relative to crude is above the recent average.
Ethane is the most common and least valuable NGL. Plentiful in many shale fields, ethane is at the biggest risk of oversupply. Unlike oil and other NGLs, ethane has yet to eclipse its spring 2010 high. But a barrel of ethane currently goes for about 30 percent of the price of a barrel of oil–slightly less than the long-term average of 33 percent.
Because NGLs benefit from higher oil prices, Schlumberger expects drilling activity to remain robust in liquids-rich gas plays, even if producers curtail operations in dry-gas plays. In other words, producers are shifting focus and resources to oil and NGLs but aren’t scaling back overall drilling activity.
In addition, the major gas producers scrambled to lease acreage in the Haynesville and other shale gas plays when natural gas prices were much higher. Landowners leasing acreage to producers don’t want them to just sit on the land indefinitely; royalty payments are based on the amount of gas produced in the acreage.
These leasing contracts often include a clause that requires the operator to drill a commercially viable well within a certain period. Producers that fail to comply with these requirements run the risk of losing their lease–and a substantial amount of money. That’s a major reason drilling activity has remained robust despite depressed gas prices.
A backlog of uncompleted wells should also bolster the North American services market. Given the tight market for pressure pumping and other services, some producers have to wait months for drilled wells to be fractured. This backlog represents a source of future revenue for the services firms.
These trends should support North American activity in the first half of 2011, but the market could weaken in the latter half of the year. For one, major service providers have responded to demand for fracturing and other key services by increasing capacity. After all, when capacity is tight and prices are soaring, it’s only natural for companies to try to increase their share of the market.
With a wave of new pressure-pumping equipment slated to hit the market in the back half of 2011, the supply-demand balance could return to equilibrium. This would erode the pricing power that’s bolstered profit margins in the North American services market.
During the company’s conference call to discuss fourth-quarter earnings, Schlumberger’s CEO Andrew Gould summed up his outlook in the following manner:
I don’t think there’s a huge risk to activity in the first half of the year. I do think pricing momentum is going to slow progressively. But as to the point where it tips over, I suspect it’s going to depend on when the capacity out there is sufficient to address the current activity. And it looks as if that’s in the second half of the year, not the first.
Gould has highlighted this risk for some time, but his comments serve as an important reminder that investors should closely monitor any companies with exposure to North American shale oil and gas drilling activity.
Of the Big Four services firms, Halliburton has the most to lose: The company is the market leader in geothermal pressure pumping, or hydraulic fracturing. Although Halliburton posted stellar fourth-quarter results thanks to a strong performance in North America, investors should heed Gould’s warning about the coming challenges. Based on Gould’s comments and similar remarks from other CEOs in the services industry, I’m downgrading Halliburton to a hold in my Energy Watch List.
This is great news for North American oil and gas producers such as Gushers Portfolio holding Oasis Petroleum and Wildcatters Portfolio holding EOG Resources (NYSE: EOG). Producers have struggled with rapidly increasing drilling costs and lengthy delays in well completions–headwinds that should abate as fracturing capacity increases.
Shares of EOG Resources pulled back after the company issued disappointing production guidance in November of 2010, citing delays in completing wells and insufficient fracturing capacity. Management stated that the firm had to wait an average of 60 to 90 days for wells completed. Some of the longest delays occurred in its oil and NGL-rich plays.
An influx of new capacity will reduce delays and make it easier for EOG Resources and other operators to meet their production targets, while limiting the ability of services firms to raise prices. EOG Resources is a buy under 115, while Oasis Petroleum rates a buy under 31.
A decline in pricing power won’t sink Halliburton, but this risk and favorable trends in international markets are a good reason to favor Schlumberger (a buy up to 85) and Weatherford International (a buy up to 26).
Schlumberger announced that it earned an extraordinary gain of $0.02 per share in the fourth quarter from an integrated project management (IPM) deal in the Bakken Shale.
In an IPM contract, a producer hires a services firm to oversee the production of a group of wells. In an unconventional field, this could involve securing a rig, handling fracturing services and managing the actual drilling.
IPM contracts have become increasingly common outside North America. Some national oil companies (NOC) lack the technical expertise required to drill complex wells. Traditionally, these NOCs would partner with an integrated oil company such as Proven Reserves holding Chevron Corp (NYSE: CVX) that boasts the know-how and experience to do the job. In such a deal, the integrated oil company usually received a percentage of the production from the field.
But many NOCs would rather maintain full ownership of their oil and gas production. Enter the services firms: In an IPM deal, they supply the technical expertise in exchange for a cash payment.
The IPM deal that Schlumberger recently inked will work a bit differently. Schlumberger’s client was a private-equity firm that owned acreage in the Bakken Shale but lacked the technical expertise to produce the acreage. According to the terms of the deal, Schlumberger would receive a share of the field’s output for managing the entire project.
When the private-equity firm sold this acreage to another producer, Schlumberger received a cut of the proceeds. The $0.02 cents per share that the services giant made on the IPM deal isn’t of consequence; however, this experience suggests that the firm has found another way to make money that offers direct exposure to oil and gas production. Management emphasized that this sort of deal isn’t a major source of earnings for the services giant. However, it is a compelling business model.
Schlumberger has traditionally been a key player in the deepwater Gulf of Mexico. At this point, the jury is out on how long it will take for activity to recover after the Macondo oil spill last spring. Although the government lifted the moratorium on drilling late last year, a de facto moratorium remains in place: Regulators have been slow to issue new permits, and producers are reluctant to restart operations until they have a better grasp on new regulations.
During the Q-and-A session at the end of Schlumberger’s fourth-quarter conference call, an analyst asked Gould about a potential recovery in the Gulf of Mexico. Here’s an excerpt from the CEO’s response:
But we still think that there a number of issues that the operators really need clearer resolution on before they are in a position to apply for new permits. And we anticipate that in the second half of the year the rate of increase will accelerate. But we’re not–we don’t think we’re going back to anything like the 33 rigs that were drilling when the moratorium started…If you’re asking do I doubt the future of the deepwater Gulf of Mexico, absolutely not, and I think that our multi-client sales are a very good proxy for the fact that there is still a huge interest in deepwater Gulf of Mexico. But until some of the questions around the regulation and the definition of liability and the definition of what constitutes well containment are settled, it’s difficult to know exactly who the client base is going to be.
Gould indicates that activity is unlikely to stage a quick recovery in the Gulf of Mexico. Producers probably won’t make major commitments until they have a better idea of what regulations governing the industry will look like. In particular, companies worry about the limitations on liability.
If liability limits are too high, smaller producers won’t be able to drill in the Gulf because they will have no way to insure against this risk. In this scenario, largest integrated oil companies will dominate the Gulf of Mexico.
Nevertheless, Gould emphasizes that the company foresees a bright future for the deepwater services industry in the Gulf. During the fourth quarter, the firm enjoyed strong demand for multi-client seismic data (MCS) on fields in the Gulf. (For those unfamiliar with the seismic services industry, see the Dec. 22, 2010, issue Here Comes the Spending.)
Seismic services involve the use of sound and pressure waves to generate a data map of rock formations and identify areas that are prospective for oil and gas. Producers usually buy MCS data when they’re interested in bidding on offshore blocks. That companies continue to buy data on the deepwater Gulf suggests two things: The firms believe that drilling will resume eventually, and that the area remains an attractive and economic market for drilling.
Management also emphasized that the BP (NYSE: BP) oil spill hasn’t weighed on deepwater drilling activity outside the Gulf. Demand and day rates dipped while the major producers inspected their rigs and reviewed safety protocols, but this process appears to be complete.
Here’s what Gould had to say about demand for deepwater drilling and services in 2011:
When we look at deepwater in 2011, the number of effective rig years added–so this is not the number of rigs added, it’s the number of rig years, which is the number of months they’re actually drilling, right?–is much, is substantially greater than in 2010. And if we look at…if I leave aside Brazil where everybody knows the story and you can to some extent make your own estimate of how many rigs will actually get added, then I think the most prospective area we’re going to see in terms of deepwater exploration in 2011 is West and East Africa and, to some extent, remote Indonesia.
According to Gould, what really matters in terms of demand for deepwater services is the number of rigs working multiplied by the amount of time they’re actually drilling, a measure known as rig years. That rigs have been forced from the Gulf and into other markets isn’t a problem for Schlumberger.
Although activity in the Gulf may never recover to pre-crisis levels, there will be more deepwater rigs working with less downtime than in 2010. Demand for deepwater services will remain robust.
Schlumberger and other companies with extensive exposure to deepwater drilling–for example, subsea equipment provider and Wildcatters Portfolio holding Cameron International (NYSE: CAM)–should continue to enjoy strong demand despite a slow recovery in the Gulf of Mexico.
Schumberger’s international profit margins grew by slightly less than 0.5 percent in the fourth quarter, a much smaller gain than in North America. The company doesn’t yet have much pricing power outside North America; most of the improvement in profit margin stemmed from an improved business mix. That is, Schlumberger sold more services that carry higher margins than in the prior quarter.
But international activity continues to pick up. The company benefited from stronger demand in the North Sea, West Africa, Russia and Asia. Management also noted an uptick in customer inquiries across a wide range of markets, a precursor to an increase in drilling activity.
Increased spending on exploration will be an important catalyst for Schlumberger, the services firm with the most exposure to this business. Such work also tends to provide solid margins for Schlumberger.
Management noted that the firm has received inquiries about exploration-related services that it wasn’t getting just three months ago. The company expects these inquires to turn into actual revenue in the second half of 2011.
Exploration spending is the biggest swing factor in the international services market. Engineering and planning work that takes place in the development stage takes a considerable amount of time to complete. In contrast, firms wishing to spend more money on seismic services or exploratory drilling can put their money to work far more quickly.
With oil prices hovering around $100 per barrel, there’s little doubt the big producers plan to increase spending. Schlumberger’s management believes that capital expenditure budgets could increase even more in 2011; the longer oil prices remain at elevated levels, the more confident producers become in the sustainability of prices. Exploration is likely to be a major component of any new spending plans.
Another key market to watch in 2011 is Iraq. Schlumberger and Weatherford International are two of the biggest players in the country, having won major contracts to help the big producers develop their fields. The Iraqi government granted concessions to major integrated oil firms to ramp up output, but the agreements governing these concessions require the operators to meet aggressive production targets.
As drilling new wells means more work for services firms, Iraq should become a key growth market. In fact Schlumberger’s management indicated that its operations in Iraq generated almost $50 million in revenue during the fourth quarter. But the work isn’t profitable yet because of high start-up costs related to moving people and equipment into place and setting up the infrastructure needed to support their work.
Substantial start-up costs in Iraq hit overall profit margins in international markets, a headwind that will persist into the first quarter. But management expects these operations to break even in the first quarter, be profitable in the second and produce double-digit margins by year-end.
The seismic services industry remains the best way to play an uptick exploration spending this year. The Energy Strategist covered the industry at great length in Here Comes the Spending, and Schlumberger confirmed many of the bullish trends identified in that issue. Once spending on exploration kicks in, excess seismic capacity should disappear: By the end of 2011 or early 2012, these firms should have more pricing power. Here’s what Schlumberger’s CEO had to say about the industry:
We think momentum in proprietary seismic outside the United States is sufficient to absorb capacity, but the lack of the Gulf of Mexico is going to slow pricing. We thought we would get pricing momentum back early this year. We are now thinking that if we do get it back it’s going to be late this year. The big question, I think, on seismic for 2011 is if there is prospectively a large lease sale at the beginning of 2012, then Multiclient could be very strong in the second half of this year.
Gould acknowledges that the Macondo spill caused producers to delay their purchases of seismic data in the Gulf. After all, if you don’t know when or if you’ll be allowed to drill, there’s not much point in buying data to look for oil.
But the spill has only delayed a return in pricing power. Schlumberger aniticipates demand for seismic data in offshore Africa and Indonesia, growth markets that will help offset the temporary slump in the deepwater Gulf.
Schlumberger’s WesternGeco division is one of the world’s largest providers of seismic services, providing exposue to this growth industry. Readers looking a purer play on this trend should consider Gushers Portfolio holding Petroleum Geo-Services (Oslo: PGS, OTC: PGSVY), a leader in marine seismic services. Buy Petroleum Geo-Services under USD16.
The stocks recommended in the three model Portfolios represent my favorite picks. The three Portfolios are designed to target different levels of risk: Proven Reserves is the most conservative the Wildcatters names entail a bit more volatility; and Gushers are the riskier plays but have the most potential upside.
I realize that this long list of stocks can be confusing; subscribers often ask what they should buy now or where they should start. To answer that question, I’ve compiled a list of 18 Fresh Money Buys that includes 16 names and two hedges.
I’ve classified each recommendation by risk level–high, low or moderate–and included a brief rationale for buying each stock. Conservative investors should focus the majority of their assets in low- and moderate-risk plays, while aggressive investors should layer in exposure to my riskier and higher-potential plays. Hedges are appropriate for investors looking to offset exposure to energy stocks.Also note that stocks that exceed my buy target for more than two consecutive issues will either be removed from the list or the buy target will be increased.