How Total Can Win Big in 2012

With 2012 just beginning, now's a great time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.

Today, let's take a look at Total (NYSE: TOT  ) . As I discussed last month, Total's stock essentially went nowhere in 2011, lagging behind many of its Big Oil peers as it labored in the shadow of the Arab Spring and the European sovereign debt crisis. But will the company's heavy move into solar power prove to be its saving grace? Below, I'll take a closer look at what people expect from Total and its rivals.

Forecasts on Total

Median Target Stock Price $62
2011 EPS Estimate                           $7.05
2012 EPS Estimate $6.95
Expected Annual Earnings Growth, Next 5 Years 3%
Forward P/E 7.3
CAPS Rating (out of 5) *****

Source: Yahoo! Finance.

Will Total go higher in 2012?
Analysts have pretty high hopes for Total this year. Although profits are seen staying relatively flat, the current valuation is extremely inexpensive, and the target stock price represents about a 20% up-move for the shares. Motley Fool CAPS members share that optimism with a top five-star rating.

Even with natural gas prices at decade lows, Total has joined the rush toward shale gas plays. Late last month, the company bought into the Utica Shale with a $2.3 billion joint venture with Chesapeake Energy (NYSE: CHK  ) and privately held EnerVest. The move is essential for Total to compete, as Spanish rival Repsol did a similar joint venture with SandRidge Energy (NYSE: SD  ) late last year as well.

A new oil area discovered off the coast of Angola also has potential for Total. Statoil (NYSE: STO  ) paid more than $1 billion for exploration licenses in the region, and BP (NYSE: BP  ) agreed to production-sharing arrangements for four more blocks in the pre-salt play. But Total has particularly strong exposure to Africa, with more than a quarter of its production coming from the continent in its most recent quarter.

After disruptions in Libya, Total needs some of these new plays to pan out. With a huge investment in solar energy to go with oil and gas exposure, though, Total's prospects depend on high energy prices sustaining themselves well into the future. For now, though, things look pretty good for Total in 2012 and beyond.

Total may be trying to profit from natural gas, but we think you might do even better with another stock. Join the thousands who've already found out its name and more about this exciting company in the Motley Fool's special free report on natural gas, but don't wait -- get it today.

Click here to add Total to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Statoil, Chesapeake Energy, and Total. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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