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 Cenovus Energy (NYSE: CVE) . The company is the result of Encana's (NYSE: ECA) 2009 spinoff of its oil and natural gas liquids business. Cenovus stayed more or less flat in 2011, dropping 0.66% from the beginning of the year until the end, but analysts are forecasting growth in 2012.
Forecasts on Cenovus Energy
Median Target Stock Price
2011 EPS Estimate
2012 EPS Estimate
Expected Annual Earnings Growth, Next 5 Years
CAPS Rating (out of 5)
Source: Yahoo! Finance.
What will 2012 bring?
Analysts are expecting a 12% jump for the stock price, and Cenovus has plenty of its own expectations to drive that growth.
The first is increasing capital expenditures by 23%; the company plans to spend between $3.1 billion and $3.4 billion this year. Much of that increase will be aimed at the company's oil assets, including its Foster Creek acreage and its other developing oil sands plays. Oil production at the company's Christina Lake project is expected to double. All told, spending on oil assets will increase by 40% over last year's expenditures, and Cenovus anticipates a 21% increase in oil production.
Cenovus also strives to maintain an efficient portfolio and plans to divest $100 million to $150 million in non-core assets over the course of the year.
Finally, in an effort to ensure that all of this new oil production can reach the market, Cenovus has signed on to help fund Enbridge's (NYSE: ENB) Northern Gateway project. The 732-mile pipeline would transport 525,000 barrels a day from Alberta's oil sands to Kitimat, British Columbia. The project carries a price tag of $5.4 billion.
Encana is surely kicking itself for spinning off what has amounted to be the better half of its business. The future is bright for Cenovus Energy, and I'm confident enough in the company's growth plan to head over to CAPS and give it the green thumbs-up. The nice thing about CAPS is that I can paste my investment thesis into a CAPS pitch, allowing me to revisit my thoughts down the road.
Focusing on oil production, Cenovus Energy will benefit from high prices in 2012. Check out three more companies Fool analysts predict will enjoy the same fate.