FORTE-TUTE

FRZ

Nibbled a bit of FRZ today. It provided an update on Jan. 26, and that took it to $4.0 level (approximately 25%). It appears to me that it nagged its production level up a bit today and the market ignored it completely. I also note that its assumption for crude oil is fairly low. In any event, it appears to be reasonably valued here (about 4.0X of CF05, and about $40K of EV/boe) with an acceptable RLI (4.5). If I read today’s announcement correctly, its Q4/04 production level should be above expectation and its 05 production level may be further raised, or at least the range narrowed. A decent multiple expansion will take it to 5.0 level, which will still be traded below 6X of its CF05. It will announce its Q4/04 results and update its 05 guidance on March 18, 2005. Keep my figures crossed.

CCL

Put a bid for some CCL, and surprise, it got filled. The company appears to show some life after five years of doing absolutely nothing. So far it had pretty good 2nd half of 2004, and 2004 results would have been much stronger had it not for currency translation. Going into 2005, the currency issue should become less severe given the appreciation of C$ during 2004 and the company should continue to show decent growth (10%) in both top and bottom lines. It is free cash flow positive and debt level should continue to fall. It is very reasonably valued, trade at 12X of its 2004 EPS and approximately 4X of its 2004 EBITDA. Using 10% growth rate, it would be trade at approximately 11X of its 05EPS. I would argue a very cheap valuation if it could manage a 10% growth in 2005. It also pays a 1.8% dividends. On the other hand, this is going to be a real sleeper. There is no analyst coverage, and the stock has not moved for about five years. This will really test my patience. (25 in 12 months).