Navios Maritime Faces Stormy Seas 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 Navios Maritime Holdings (NYSE: NM  ) . As I discussed last month, Navios was in the wrong place at the wrong time in 2011, with bad pricing for shipping and Greece's sovereign debt woes dealing the stock a double blow. But could 2012 be a comeback year for the industry? Below, I'll take a closer look at what people expect from Navios and its rivals.

Forecasts on Navios Maritime Holdings

Median Target Stock Price $6
2011 EPS Estimate                           $0.60
2012 EPS Estimate $0.58
Expected Annual Earnings Growth, Next 5 Years 16%
Forward P/E 6.5
CAPS Rating *****

Source: Yahoo! Finance.

Can Navios Maritime Holdings bounce back in 2012?
Analysts have a fairly optimistic view of Navios. The current target price for the stock represents more than a 50% increase from its current level around $3.75 per share. And while earnings aren't expected to rise this year, analysts do see them jumping in the longer run. Combined with an attractive valuation, Navios has a lot of growth potential.

But first, the company will have to navigate a cutthroat environment in the shipping industry. On the oil tanker side, Frontline (NYSE: FRO  ) reported a big loss in its third quarter, and appears to be one of the weakest companies in the industry as it said it needed more money for its operations. That, in turn, hurt Ship Finance International (NYSE: SFL  ) due to its connections to Frontline.

Unfortunately, Navios doesn't have the healthiest balance sheet either, with a debt-to-equity ratio of 127%. But its strong portfolio of long-term charters in place gives it a competitive advantage over Diana Shipping (NYSE: DSX  ) and DryShips (Nasdaq: DRYS  ) , which have seen increasing pressure from expiring contracts that force it to take now-lower daily rates.

Navios needs the shipping industry to work through its current glut of capacity. If the world economy can recover from its long swoon, that could bring the industry closer to its former glory.

Navios may have plenty of profit potential, but it's not the only smart stock for your portfolio. Take a look at the Motley Fool's latest special report to find three powerful stocks for long-term riches. It's absolutely free, but it won't be around forever, so click here and read it today.

Click here to add Navios Maritime 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.


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On January 19, 2012, at 11:28 AM, Teacherman1 wrote:

    Dan

    I think one often overlooked key to the shipping business in general is the management involved.

    While there are a lot of external factors over which they have no direct control, the best of the managers are seldom surprised by what happens, and don't wait for events to overtake them, but are very proactive in preparing for those events.

    IMO, Navios Holdings has one of the most capable CEO's in the business, who is extremely well versed in utilizing multiple means of financing the overall company and very adept at using the stellar reputation they have to take advantage of opportunities that others have overlooked, or just can not achieve.

    As she stated in reply to a question by an analyist during one of their conference calls in the past, "we don't guess".

    They will be a survivor and will prosper in the longer run, so I am taking advantage of these "beat down" prices to accumulate a reasonable position in them.

    As an aside, the "Greek Problems" are psychological, rather than fiscal, since very few of these "so called Greek shipping companies" rely on the Greek economy for their financial well being.

    JMO and worth exactly what I am charging for it.

  • Report this Comment On January 19, 2012, at 5:52 PM, drfool21 wrote:

    Teacherman1,

    For the sake of my 12,500 shares invested in this company--I certainly hope you are right! I got a little greedy during it's last run, Spring 2010 and now I'm stuck! Got caught speculating instead of investing...

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