The Price is Right

As always I am looking for information to identify when our investments have reached their true valuation. This is very key because too often as investors we struggle with selling a good stock too soon or holding on to a bad one too long. It reminds you of the contestants on The Price is Right because no one can seem to guess correctly. So you know I keep my ears to the streets and this is the information I found on Clayton Williams (CWEI) and Burlington Northern (BNI).

First up is an analysis of CWEI, courtesy of ZACKS INVESTMENT RESEARCH:
We are maintaining our Buy recommendation on small-cap company Clayton Williams Energy, Inc. ( CWEI ), but raising our estimates and price objective on account of an updated price deck. The stock's recent strength of the stock makes it evident that the market is taking another look at it after staying from the Clayton story given management's appetite for wildcat exploration with less than stellar results and a highly levered balance sheet. The current surge in oil prices no doubt serves as a very important backdrop.
We believe that Clayton's proved developed reserve base is not getting the value it deserves in the market. The company is devoting more resources to oil drilling in the Permian Basin and Austin Chalk, which is expected to bring a substantial amount of oil production online in 2008 and 2009. We are raising our earnings view to $7.48 from $5.90 per share for 2008 and to $9.46 from $6.38 per share for 2009.
With prices locked in place, Clayton's revenue streams and cash flows should be consistent and more attractive to investors. Energy markets are also likely to remain extremely volatile. The company has effectively mitigated its exposure to price swings. These factors should help Clayton's price appreciate in the near term. Our revised price target of $96 is the result of a multi-faceted valuation approach anchored by our after-tax NAV estimate.

Next is a report of BNI from the Associated Press:

NEW YORK (AP) -- The chairman, president and chief executive of railroad operator Burlington Northern Santa Fe Corp. sold 23,919 shares of common stock, according to a Securities and Exchange Commission filing Tuesday.
In a Form 4 filed with the SEC, Matthew K. Rose reported he sold the shares Thursday for $108 to $108.49 apiece.


My take on this information is that CWEI will continue to rise because of many of these things that Zacks identified in their analysis. Their report was written on Tuesday May 27 and look what the stock price did on Friday, an 11% spike to over $94. To see how far we've come on this stock read the most recent posts on CWEI. And my view of BNI is that I will closely monitor it because of the number of executives that are selling shares in the company. It concerns me but I will maintain my current position until who knows...when Buffet sells.

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