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 Rentech (AMEX: RTK ) . As I discussed last month, Rentech gives investors a powerful combination of a ground-floor biofuel opportunity combined with a well-established nitrogen fertilizer business. With both industries looking healthy right now, Rentech looks like it's in the right place at the right time. Below, I'll take a closer look at what people expect from Rentech and its rivals.
Forecasts on Rentech
|Median Target Stock Price
|Fiscal 2012 EPS Estimate
|Fiscal 2013 EPS Estimate
Source: S&P Capital IQ.
Will Rentech grow in 2012?
Rentech faces a mixed bag of expectations. Analysts are somewhat neutral on the stock, with an aggressive price target but weak long-term expectations for earnings. Motley Fool CAPS members have a similar middle-of-the-road impression of the company.
Those mixed feelings may come from the company's two competing directions. On the fertilizer front, Rentech can depend on favorable conditions in the agricultural markets to provide valuable cash. Terra Nitrogen (NYSE: TNH ) is ramping up its capacity to deal with an anticipated record planting season in 2012. CVR Partners (NYSE: UAN ) similarly expects good conditions going forward as it seeks to expand its urea ammonium nitrate production. Yet while that increased capacity may help those competitors, it could leave Rentech behind unless it takes its own steps to keep up.
At the same time, biofuel represents a potential long-term gold mine for Rentech, despite its being in early stage development. The company has a huge advantage over rival Amyris (Nasdaq: AMRS ) because Rentech can use multiple inputs to make its biofuel products, including biomass and waste streams, rather than just the plant-based sugars that Amyris uses. As I see it, Rentech has the same potential in the space as Solazyme (Nasdaq: SZYM ) , which also uses multi-source feedstock -- but Rentech has the added advantage of having its fertilizer business available to provide capital.
Obviously, Rentech's success will depend on commodity prices in both the ag and energy sectors. High crop and oil prices could give Rentech another great year in 2012.
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Click here to add Rentech to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.