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Will Stillwater Mining Make a 2012 Comeback?

With 2012 just beginning, now's a smart 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 Stillwater Mining (NYSE: SWC  ) . As I discussed last month, Stillwater Mining suffered a huge drop in 2011, as platinum and palladium prices failed to keep up with gold's strong run. In addition, the company made what many saw as a horrendous acquisition, paying premium prices for a gold and copper project in Argentina. Can Stillwater get its mojo back? Below, I'll take a closer look at what people expect from Stillwater Mining and its rivals.

Forecasts on Stillwater Mining

Median Target Stock Price $17
Fiscal 2011 EPS Estimate $1.20
Fiscal 2012 EPS Estimate $1.04
Expected Annual Earnings Growth, Next 5 Years 45%
Forward P/E 10.7
CAPS Rating (out of 5) ****

Source: Yahoo! Finance.

What will 2012 look like for Stillwater Mining?
Analysts and investors alike have mixed feelings about Stillwater's future. At least for 2012, analysts expect a significant drop in earnings. Yet their price target, which stands more than 50% above the current stock price, reflects the much higher growth expectations that those following the company have over the longer term.

If the first trading day of 2012 was any indication, though, Stillwater might have some hope to meet those high expectations. With ETFS Physical Platinum (NYSE: PPLT  ) rising almost 3% and ETFS Physical Palladium (NYSE: PALL  ) up more than 1%, investor demand for platinum-group bullion appears to be starting off 2012 strong. Good news for the industrial sector also boosted the metals ETFs, as platinum and palladium are key components in auto production. Yet Stillwater did even better, posting a 6% gain in its first trading session.

Having seen shares of many miners fall disproportionately hard in 2011 compared with the performance of the metals they mine, Stillwater would benefit most from a reversal of that trend. Yesterday's trading action overall looked promising on that score, as both the Market Vectors Gold Miners and Market Vectors Junior Gold Miners outperformed gold bullion's jump. Rival North American Palladium (AMEX: PAL  ) , which is the only other producer of platinum-group metals on the North American continent, advanced 9% during the session on no apparent news other than the general uptrend in metals prices.

Platinum demand may prove to be the key to Stillwater's year. With platinum prices below gold, premium jeweler Tiffany (NYSE: TIF  ) could well see more customers gravitating toward the white metal. If that happens, Tiffany's margins could rise from customers who've grown to expect platinum jewelry to cost more than gold. If increased demand only pushed platinum prices to be on par with the price of gold, it would mean a $200 up-move -- and go a long way toward getting Stillwater back to its pre-2011 form.

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Click here to add Stillwater Mining 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 Market Vectors Gold Miners ETF and writing puts on Market Vectors Junior Gold Miners ETF. 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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