Diversification Pays Off for the Holiday Portfolio

Carrizo Provides Energy

So far in 2007, small-cap oil-and-gas explorer Carrizo (CRZO Quote) is the winner, up more than 30% year to date. The company's ongoing growth in Texas' Barnett Shale has pushed current natural gas production levels to all-time records.

Carrizo could get another boost if its exploration efforts along the Gulf Coast of Texas and Louisiana are successful. It's testing a 20,000-foot-plus exploration well that could lead to the discovery of a natural gas field with more than a trillion cubic feet of natural gas reserves. While the well is high-risk, most of the costs have been paid by Carrizo's partner, Petrobras (PBR Quote).

Although the well could ultimately prove to be more of a science project than a gusher, it should help provide important data for further exploration of the field. Of course, a gusher would be a positive, but a disappointment could cause a temporary setback for Carrizo's shares.

The real opportunity in 2007 is the company's focus on shale plays. In the Barnett, it continues to grow reserves and production as it becomes more efficient at drilling and producing from the play. In the Floyd Shale, it's still early in the process, so predictions of success are more difficult. Yet, Carrizo's nearly 150,000 acres in the play provide plenty of exploration and development opportunity.

Altria: Still Smokin'

The second strongest performer in the portfolio is Altria (MO Quote). Some may find the company's tobacco business offensive, but this stock is a consummate money maker. Altria is a very simple story: solid cash flow, good management and an ever-growing dividend. It does face tobacco-related litigation and a small amount of cyclical economic risk. For now, however, it's hard to find a better all-weather stock for a portfolio than Altria.