12 Large-Cap Stocks Set to More Than Double Their EPS in 2014

Time certainly flies when you're having fun -- and much fun was to be had this year, with all three major market indexes returning more than 20%!

In order to keep this joyous spirit going throughout the next two weeks leading up to Christmas, I've decided to once again count down this holiday season with my own Foolish rendition of the "12 Foolish Days of Christmas." Instead of turtle doves, French hens, and partridges invading pear trees, you'll be privy to high-growth stock ideas, game-changing innovations from a wealth of industries, unique ways to fuel your retirement account, and so on.

So, without further ado, let's get started...

"On the 12th day of Christmas my true love gave to me..."

Source: Zack McCarthy, Flickr.

12 Large-Cap stocks set to more than double their profits in the upcoming year!

For my criteria I decided to keep it simple: Projected 2014 EPS had to be more than double what the company is expected to earn in 2013, according to estimates found on Yahoo! Finance and Finviz (EPS losses turning to profits in 2014 were OK), and the market cap had to be at least $5 billion (I'm stretching the boundaries of "large cap" just a bit here). Beyond that, I simply wanted as many industries as possible represented. Here are the results:

Company

Projected EPS This Year

Projected EPS Next Year

Year-Over-Year EPS Improvement

CONSOL Energy (NYSE: CNX  )

$0.01

$1.08

10,700%

Pandora Media (NYSE: P  )

$0.03

$0.27

800%

Sony (NYSE: SNE  )

$0.20

$1.08

440%

Amazon.com (NASDAQ: AMZN  )

$0.73

$2.68

267%

ArcelorMittal (NYSE: MT  )

($0.57)

$0.78

237%

MGM Resorts (NYSE: MGM  )

($0.23)

$0.22

196%

Groupon (NASDAQ: GRPN  )

$0.09

$0.25

178%

Tesla Motors (NASDAQ: TSLA  )

$0.58

$1.50

159%

Ocwen Financial (NYSE: OCN  )

$2.20

$5.22

137%

Netflix (NASDAQ: NFLX  )

$1.76

$4.03

129%

Forest Laboratories (NYSE: FRX  )

$1.14

$2.51

120%

Nucor (NYSE: NUE  )

$1.40

$3.01

115%

Source: Yahoo! Finance, Finviz, author's calculations.

Let's take a quick look at what's behind the profit surge for each company so you'll have a head start in adding some potentially high-growth stocks to your watchlist in 2014.

CONSOL Energy
CONSOL, a producer of metallurgical and thermal coal, has struggled under the weight of product oversupply, weaker coal pricing, cheap natural-gas prices -- which encourage utilities to switch from coal-powered plants to gas-burning plants -- and a slowdown in Chinese demand. Heading into 2014 it appears coal prices are beginning to stabilize, natural-gas prices are modestly higher than they were at this time last year which is helping CONSOL's own natural gas operations, and CONSOL is trimming costs and raising cash by announcing the closure of its sale of five West Virginia mines for $3.5 billion this past week to Murray Energy. 

Pandora Media
Having only marginally turned the corner to profitability, Pandora will be benefiting in 2014 from increased online advertising and better ad rates since it's seen its share of U.S. online radio listeners improve year-over-year in November to 8.44% from 7.17%. In addition to improved market share, Pandora has also seen active listeners increase by 10 million to 72.4 million over the trailing year. However, investors should expect its costs to increase as it attempts to reach more listeners and fend off Apple.

Sony
Will this be the year Sony's television division doesn't completely sack its results? Probably not, as I suspect weak margins and a lack of brand recognition will continue to hamper results. It's really more about the release of the Sony PlayStation 4, the success of its Xperia smartphone, and an expected absence of one-time earnings losses related to its movie operations. Keep in mind, though, that just because EPS are expected to rebound, it doesn't mean Sony's share price necessarily has any business moving higher.

Amazon.com
We all knew that at some point e-tailing giant Amazon would stop expanding willy nilly and start converting its cash flow into profits -- and 2014 looks like the year this will happen. With the very real potential for long-term double-digit marketplace, cloud-computing, and content streaming growth from domestic and overseas markets, it's not tough to see why investors are bullish on Amazon. The 48% growth in operating cash flow last quarter...yeah, that didn't hurt either!

ArcelorMittal
Similar to CONSOL, steelmaking giant ArcelorMittal has struggled with lower steel demand, oversupply, and weak pricing. However, with the company aggressively cutting costs in order to control output and help global pricing, and global demand beginning to once again pick up, it appears ArcelorMittal could surprise investors in 2014. With EBITDA exhibiting its first year-over-year improvement in two years in the third-quarter, investors would be wise to watch the steel market and its largest producer, ArcelorMittal, in 2014.

MGM Resorts
Following multiple years of losses, it appears that MGM Resorts may be turning the corner thanks to strong EBITDA growth in its Macau assets and a modest increase in revenue-per-average-room growth within the U.S. in its latest quarter. However, like Sony, I'm not sure I would be taking the pompons out of the box just yet, as high debt levels ($11.6 billion) cut many of MGM's strategic growth avenues off at the waist.

Groupon
Investors looking for a good deal might enjoy the double entendre that daily deal site Groupon will offer, with EPS expected to jump 178% in 2014. Part of this growth should come from the purchase of TicketMonster from rival LivingSocial, but primarily Groupon is expecting to leverage its merchant and small business relationships and traffic-driving abilities to push revenue modestly higher while focusing on cost controls. But consider me still a bit worried about the health of this business model over the long term.

Tesla Motors
CEO Elon Musk did what hasn't been done for half a century, as Foolish auto contributor John Rosevear noted last week: he successfully established a new car brand. With the company now profitable on an adjusted basis, Tesla can focus on doubling production of its Model S and preparing the market for the introduction of the Model X electric SUV sometime in late 2014. One thing to keep in mind despite Tesla's recent success: vehicle introductions rarely stay on schedule based on Tesla's history!

Ocwen Financial
Mortgage loan servicing specialist Ocwen Financial is expected to see a nice rebound in 2014 as one-time expenses and acquisitions are wiped off its books compared to 2013. A higher number of mortgage prepayments could boost income over the near-term, but it also threatens to reduce cash flow over the long run and hurt Ocwen's organic growth potential. Ocwen looks like an iffy proposition for 2014 and beyond.

Netflix
It may be hard to believe that content streaming king Netflix can follow its ridiculously impressive 2013 with another equally impressive year, but that's looking like the case. Netflix leveraged its content to sign nine key partnerships last year, with none being more bountiful over the long-term than its collaboration with Disney. With international revenue and total members more than doubling and Outerwall getting left in the dust, the Netflix revival may just continue.

Forest Laboratories
Previously struggling biopharmaceutical company Forest Labs is looking to heat things up in 2014 by relying on strong growth from many of its newer FDA-approved drugs. In the third-quarter, hypertension drug Bystolic delivered strong growth of 22%, Teflaro, a bacterial skin infection drug, saw sales rise 49%, and respiratory pipeline products Tudorza and Daliresp delivered encouraging early sales. Keep in mind, though, that the company's lead drug, Namenda, will lose patent protection in 2015.

Nucor
Finally, steelmaker Nucor is enjoying many of the same perks as ArcelorMittal, with demand stabilizing and production disruptions at some of its primary rivals helping to keep supply down. Although Nucor may experience some challenges as it expands its existing mills and reduces production in others for maintenance, it's well-positioned for a rapid ramp-up in production once the tide turns for good within the sector.

But Which Stock Will Rule 2014?
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!


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