Statoil Looks Forward to a Strong 2012

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 Statoil (NYSE: STO  ) . As I discussed last month, Statoil managed to avoid the turmoil in Europe to post reasonable gains for 2011. As the company builds out capacity around the world, the big question is whether shareholders will reap the rewards this year and beyond. Below, I'll take a closer look at what people expect from Statoil and its rivals.

Forecasts on Statoil

Median Target Stock Price $27.75
2011 EPS Estimate                           $2.78
2012 EPS Estimate $2.79
Expected Annual Earnings Growth, Next 5 Years 8%
Forward P/E 9.1
CAPS Rating *****

Source: Yahoo! Finance.

Will Statoil keep rising in 2012?
Analysts expect Statoil to see only modest growth this year. The target price for the stock is only about 10% higher than its current share price, and a single penny of earnings growth doesn't exactly raise confidence. But as always in energy, the big determinant of success will be what happens to oil and gas prices in 2012.

So far, at least, that's a mixed picture. On the gas front, Range Resources (NYSE: RRC  ) and Ultra Petroleum (NYSE: UPL  ) have been among the worst-performing stocks to begin 2012, as natural gas prices have plummeted to their lowest levels in a decade. That will hurt not only those companies but also Statoil, as its recent buyout of Brigham Exploration has only added to the gas exposure it picked up previously by buying into the Marcellus shale in an acreage purchase from Chesapeake Energy (NYSE: CHK  ) .

But oil remains above the $100 per barrel mark, and indications suggest that it could stay there for a while. Statoil will benefit from a new discovery in the Barents Sea off the northern coast of Norway, along with Italy's Eni (NYSE: E  ) , which owns a 30% stake in the oilfield. Combined with a huge find in the North Sea late last year, Statoil is poised to boost production and reap the benefits of high oil prices.

All in all, Statoil looks like it's in a good position going forward. The same geopolitical issues that the rest of the industry faces also apply to Statoil, but if there aren't major disruptions in 2012, the company should enjoy a good year.

Statoil is getting into natural gas in a big way, but we've got another stock we think is an even more exciting gas play. Join the thousands who've already found out its name and more about the company in the Motley Fool's special free report on natural gas, but don't wait -- get it today.

Click here to add Statoil 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. The Motley Fool owns shares of Ultra Petroleum. Motley Fool newsletter services have recommended buying shares of Range Resources, Ultra Petroleum, Statoil, and Chesapeake Energy. 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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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 13, 2012, at 10:20 AM, lctycoon wrote:

    Statoil is a long-term play. The company is suffering production declines and while it is actively moving to turn this around, it won't happen this year.

    With that said, I am long Statoil and am confident in the long-term success of the company.

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