3 Stocks Expected to Double Earnings in 2013

Third-quarter earnings season was an unmitigated disaster.

With the economy stumbling along due to weakness in Europe and China, and margins reaching a multi-year cyclical high, more than a few companies disappointed the Street with weaker-than-expected earnings or guidance.
This list includes bellwethers like McDonald’s Corp. (NYSE: MCD), Caterpillar Inc. (NYSE: CAT) and even seemingly invincible technology juggernauts like Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG), all delivering results short of expectations that sent shares and estimates tumbling lower.
These disappointing results mirrored a larger trend. Total S&P 500 earnings for the quarter were down 2.2% from last year, the first year-over-year decline in more than three years. Total revenue is also down 3.6%, with just 38% of companies reporting revenue surprises. Although analysts are still calling for 3.5% earnings growth in the fourth-quarter and 7% earnings growth in 2013, it’s clear the private sector is facing some serious challenges in the face of slow economic growth.#-ad_banner-#
But despite these obvious headwinds, there was a select handful of stocks that crushed earnings estimates, raised guidance and are now expected to double earnings in 2013. These are companies that appear to be operating in a vacuum and look highly immune to the macroeconomic challenges that have weighed on their peers.
But because a bullish growth projection can be quickly priced into assets, I added a valuation filter in my search to find stocks with the highest probability of delivering big returns next year.
Here are three stocks that stood out. Each of them is expected to double earnings in 2013…
1. Coffee Holdings Co. Inc. (NYSE: JVA)
2013 EPS growth projection: 104%
PEG Ratio: 0.40
Upside: 225%
Coffee Holdings is a tiny company with a market cap of just $39 million. But this tiny company is incredibly profitable. It recently reported third-quarter earnings of 19 cents a share  — an incredible 1,800% ahead of expectations of 1 cent per share. This bullish report had a big effect on earnings estimates, sending the current-year estimate up 22% to 50 cents a share. In 2013, earnings are expected to be 104% higher than this year, climbing to $1.02 a share. 
But in spite of these bullish projections, Coffee Holdings looks extremely undervalued. The stock currently trades with a price-to-earnings/growth (PEG) ratio of just 0.40, a sharp discount to the S&P 500’s 1.3. If shares traded with the same valuation as the S&P 500, despite Coffee Holdings’ bullish growth projection, then shares could jump 225%. 
Coffee Holding’s average daily volume of 308,000 shares provides plenty of liquidity and its 2% dividend yield offers an attractive stream of income to complement potential growth. 
2. BRF Brasil Foods SA (Nasdaq: BRFS)
2013 EPS growth projection: 175%
PEG Ratio: 1.29
Upside: 20%
Brasil Foods is a poultry, pork and beef producer out of Brazil with a market cap of $15 billion. This established food company isn’t exactly a high-tech flyer, but operating in the high-growth emerging market provides support for long-term gains. 
As it stands, analysts are calling for full-year earnings of $1.07 a share in 2013, a 175% increase from projected full-year earnings of 37 cents a share this year. This has Brasil Foods trading with a highly discounted PEG ratio compared to its peers. If Brasil Foods closed half the gap between its PEG and its peers PEG, then shares could climb to $22 — a 20% increase from current levels.
3. Carrizo Oil & Gas (Nasdaq: CRZO)
2013 EPS growth projection: 130%
PEG Ratio: 0.21
Upside: 200%
Carrizo Oil & Gas is a crude oil, natural gas exploration and production company with operations in the United States and United Kingdom with a market cap of $715 million. Carrizo is fresh off the heels of a solid third-quarter earnings surprise of 16%, but with the market worried about growth, shares have plummeted 26% so far in November. Even though estimates have fallen a bit, next-year’s earnings of $3.14 a share is still an incredibly bullish growth projection of 130%, which sets the foundation for a sweet value play in energy. Carrizo’s PEG ratio of 0.21 is a huge discount to the industry average of 1.38. If Carrizo returned to even half the valuation of its industry peers, then shares would be in position to jump more than 200%.
Risks to Consider: Bullish growth projections can quickly be absorbed by the market and show up in higher asset prices and valuations. These full-year 2013 growth projections are also more than 12 months away, which means economic volatility and uncertainty could affect actual results.

Action to Take –> These three stocks could double their earnings in 2013. And with tons of value relative to their peers, this is a great time to cash in on stocks with big growth projections that are flying under the radar.