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 Capstone Turbine (Nasdaq: CPST ) . As I discussed last month, the small company has been a pioneer in the microturbine electricity generation business for years. Yet Capstone hasn't found a way to become consistently profitable. Below, I'll take a closer look at what people expect from Capstone Turbine and its rivals.
Forecasts on Capstone Turbine
|Median Target Stock Price||$2|
|Fiscal 2012 EPS Estimate||($0.09)|
|Fiscal 2013 EPS Estimate||$0.01|
|Expected Annual Earnings Growth, Next 5 Years||30%|
|CAPS Rating (out of 5)||***|
Source: Yahoo! Finance.
Will Capstone Turbine power up in 2012?
Analysts think that calendar 2012 may finally be the year that Capstone gets itself into the black. With a target price nearly 80% higher than the stock's current level, expectations are for 30% revenue growth in both fiscal 2012 and 2013, with the company finally eking out a $0.01 per share profit next year.
The real question for Capstone is how it can expand its customer base. Last month, it managed to extend its current original equipment manufacturer contract with General Electric (NYSE: GE ) to sell GE's Clean Cycle waste heat recovery generator, which complements Capstone's microturbines. The agreement now runs through January 2016, with GE providing parts support through 2020. That relationship could flower into something that would boost Capstone's microturbine sales as well.
But Capstone's best bet remains oil and gas drilling in remote areas where power supply is tricky to obtain. In 2011, an unnamed oil and gas producer in the Eagle Ford shale play ordered 22 microturbines. Although it's unknown which company bought the equipment, Chesapeake Energy (NYSE: CHK ) and EOG Resources (NYSE: EOG ) have extensive assets in the area and certainly have the resources to make a big order to secure dependable power supplies.
What Capstone really needs to thrive is increased interest in locally generated grid-power alternatives. That may be a long time coming, but if it eventually arrives, Capstone is still in a prime position to profit from it.
Despite Capstone's promise, I still think there's a much more promising energy stock. Read The Motley Fool's latest special report and find out the name of this smart energy play. It's free, but don't wait too long -- click here now and get what you need to know.
Click here to add Capstone Turbine to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.