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%|
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.
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Click here to add Navios Maritime to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.