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A Better 2012 for Paramount Gold & Silver

With 2012 just beginning, now's a good 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 Paramount Gold & Silver (AMEX: PZG  ) . As I discussed last month, Paramount saw its stock get beaten down badly in 2011, as silver posted a small loss for the year, and gold -- while advancing -- gave up much of its gains from earlier in the year. With its unusual business model, the company is also hard for some investors to evaluate, although its assets unquestionably have a lot of promise. Below, I'll take a closer look at what people expect from Paramount Gold & Silver and its rivals.

Forecasts on Paramount Gold & Silver

Median Target Stock Price $11.63
Normalized 2011 EPS Estimate ($0.13)
Normalized 2012 EPS Estimate ($0.03)
Expected Sales Growth, Fiscal 2013 vs. Fiscal 2012 929%
CAPS Rating ***

Sources: S&P Capital IQ and Yahoo! Finance.

What will 2012 bring Paramount Gold & Silver?
Analysts and investors have lofty expectations for Paramount, although they're not in a big hurry. The target price that the single analyst following the company has pegged is about five times its current share price. Yet only in fiscal 2013 does that analyst expect to see a big ramp-up in production revenue.

One reason why so few professionals are willing to state an opinion about Paramount is that it doesn't yet have any revenue. Coeur d'Alene (NYSE: CDE  ) has enjoyed big success with a world-class mine that's immediately adjacent to Paramount's San Miguel project. That mine helped upgrade Coeur d'Alene's reserves significantly a few years ago, and there's hope that San Miguel will do the same for Paramount.

Meanwhile, the company's Sleeper mine in Nevada represents an even more attractive carrot for those companies that might want to pursue Paramount. Having already boosted measured and indicated resources at Sleeper, Paramount is in a strong position to market the mine to big players in the area. Newmont Mining (NYSE: NEM  ) acquired Fronteer Gold earlier this year, so it might be less likely to take another bite of the Nevada apple. But competitor Barrick Gold (NYSE: ABX  ) may want to grab up Sleeper as a way to block Newmont and pick up an excellent value.

Small players like Paramount are always inherently speculative and dependent on bullion prices. But even with no revenue, gold and silver are expensive enough that a major gold producer could give Paramount shareholders a big payday with a takeover bid. Regardless, though, Paramount is giving its investors plenty to look forward to in 2012 and beyond.

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Click here to add Paramount Gold & Silver 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. 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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PZG $1.75 Down -0.03 -1.69%
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