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