The thunder rolls, And the lightning strikes . . .
– Country song by Garth Brooks.

Strike up the band. There’s thunder rollin’ in the oilpatch these days where Thunder Energy and other slick oil and gas plays have been taking the ’patch by storm, much to the delight of shareholders.

Tourists visiting the Thunder website (www.thunderenergy.com) are welcomed by a clap of thunder, visuals of a duelling bull and bear and the company’s rockin’ theme song: Thun-der!

Thun-derrr!!

Then, a sales pitch appears out of the clouds: “We know how to drive profits.”

Thunder’s jazzy intro may once have seemed like hollow hype orchestrated by a cheeky organization, but these days it’s synonymous with the party atmosphere in the oilpatch with junior oil and gas stocks rockin’ and commodity prices rollin.’

Indeed, Thunder (THY-TSX) is true to its word. It does know something about driving profits.

And its share price.

A thunderin’ stock price has had a posse of research analysts feverishly revising Thunder’s target prices, and some of them still can’t keep up.

For example, Canaccord Capital’s Gord Currie raised his 12-month target price for Thunder three times in less than four months while maintaining a buy recommendation. It was raised to $6 Oct. 21, then to $6.50 on Nov. 10 and finally to $7 on Feb. 14.

The stock just broke the $7 barrier, hitting a 52-week high of $7.20, with Thunder releasing a silver-lined guidance forecasting 2003 cash flow of $75 million or $2.30 per share.

Currie’s not alone playing catchup. Of 11 firms covering Thunder, nine of the most recent target prices posted on Thunder’s website are below the current price.

Thunder has even eclipsed the target of Peter Linder, which is no small feat. Linder, manager of the DeltaOne Energy Fund, is the reputed brahma bull of oil and gas analysts.

In November, Linder proved to be ahead of the herd when he made Thunder his top pick in the Edge’s Pro’s 3 Stars column at $5.25 and gave it an unofficial $7 target (for Linder’s latest picks, see Pro's 3 Stars column this week).

But Thunder is only one of several oil and gas companies that have had analysts scrambling to hoist targets. Numerous juniors have more than doubled just in the past year, including Defiant Energy (DEF-TSX), Cequel Energy (CQL-TSX), Bow Valley Energy (BVX-TSX), Tappit Resources (TPT-TSX) and Viracocha Resources (VCA).

Nine months ago, Peters & Co. oil and gas analyst Andrew Boland made a timely bullish call on the juniors in this space, predicting a raging bull market for them. He figured at the time that the bull could run for as long as two to four years.

While small caps and mid caps have been on fire, large caps such as EnCana (ECA) and Canadian Natural Resources (CNQ) have lagged behind the juniors, showing only modest gains despite oil prices that have been pushing $40 US per barrel and the NYMEX natural gas price hitting $8 US.

Although the bash in the ’patch may be far from over, investors sitting on those doubles and triples might be wise to scan some sobering five-year charts showing just how volatile oil and gas stocks can be.

Even some analysts and fund managers such as Boland and Linder remind investors that nobody ever went broke taking profits.

For instance, if you’ve got a double, sometimes it’s wise to sell half your shares, taking your investment off the table and letting the rest ride.

As bullish as Boland was nine months ago, he did offer a cautionary note.

“Timing is everything in a bull market,” he said then.

“Know when to sell. When the commodity prices seem too good to be true, it’s time to sell the company, even if you’re not ready.”

In other words, if you stay out in the thunder too long, you may get struck by lightning.

* STREET TALK: Frank Holmes, who formerly toiled on Bay Street, is CEO of San Antonio, Tex.-based U.S. Global Investors and one of the most respected money managers. He recently shared his theory about portfolio allocation based on age. The older you get, says Holmes, the less you should invest in equities.

“If you are 50 years old, you should have 50 per cent fixed income and 50 per cent equities,” said Holmes, who boasts two funds that have almost doubled in the past year, the Gold Shares Fund and the World Precious Metals Fund. “If you are 60 years old, you should have 60-per-cent fixed income and 40-per-cent equities and so on. You should also have a minimum of five per cent in gold up to 10 per cent, so when you get these huge runs (in gold prices) they offset the declines (in other stocks).”

The biggest weighting in Holmes’ gold funds is a Canadian producer of gold and silver, Wheaton River Minerals (WRM-TSX). Two other favourites are Bema Gold (BGO-TSX) and X-Cal Resources (XCL-TSX).

* SAGE WORDS: “It should be an inviolate rule that an investor never buys on a price fall. The investor must wait for a rise to be sure that the uptrend has begun.”

– Brian J. Millard, author of Winning on the Stock Market.



HOT ALBERTA STOCK: Burmis Energy
BME-TSX 63 cents
Up 12 cents (+23.5%) on 459,400 shares (for week ending Feb. 28).
With natural gas prices spiking big time, gassy stocks caught fire. Burmis is the new kid on the block and the Calgary company recently announced an ambitious drilling program focused on natural gas production.



HOT ALBERTA STOCK: Alternative Fuel Systems
ATF-TSX 14 cents
Down 4.5 cents (-24.3%) on 973,600 shares (for week ending Feb. 28).
More gas pains for Alternative Fuel’s stock, which is 70 per cent off its 52-week high.
The Calgary company’s major revenue stream has dried up, at least in the short term. A European automaker has discontinued orders for natural gas pressure regulators that accounted for 62 per cent of Alternative’s 2002 revenue.