2 Large-Caps That Are Expected To Nearly Double Earnings By 2020

KeyCorp (NYSE:KEY)

In existence for over 160 years, the Ohio-headquartered regional bank is expected to deliver an EPS growth of almost 95% over the next three years. KEY delivered better than expected earnings and revenue in the most recent quarter, which also marked the full integration of Buffalo-based First Niagara Bank — acquired by KEY last year in a deal worth nearly $4 billion, the biggest acquisition in the bank’s history.

The acquisition would be the key growth driver with earnings projected to increase almost 55% this year alone. What’s going to drive this growth is substantial increase in KEY’s total loans and deposits (to the tune of 45%), while synergies kick-in. In addition, KEY sports a strong balance sheet, which may not need further leveraging to boost earnings after the acquisition.

Nucor Corporation (NYSE:NUE)

Shares of the Charlotte-based steel producer, also the top-producer in the US, are up nearly 42% over the past year, with the majority of those gains coming after president Trump’s victory, which fuelled a rally in infrastructure related industries. Although, NUE delivered a big positive earnings surprise in its most recent quarter — EPS and revenue came in at $0.50 and $3.96 billion, compared to expected $0.34 and $3.77 billion. However, that positive surprise was entirely due to how it calculates the cost of its inventories. So far, it seems that just sentiments drove the stock higher.

Analysts expect NUE to deliver nearly 50% EPS growth in 2017 and more than 100% in three years, driven by NUE’s competitive advantage in terms of scale that can help it ride the infrastructure spending wave more profitably than the rest of the steel-manufacturers. NUE also has solid dividend payout track record and currently yields 2.43% with an acceptable payout ratio of 60%. While there has hardly been any dividend growth, inflated earnings may also improve the amount NUE distributes to its shareholders.