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3 Blue-Chip Stunners Going For A Song: Banco Santander SA, GKN plc And British American Tobacco plc

Today I am explaining why value hunters should check out these big-cap beauties.

Banco Santander

I am convinced that lucrative Latin America provides the key to explosive earnings growth at Banco Santander (LSE: BNC). The business currently derives 38% of attributable profits from this region, and more than a fifth of the group total from continental powerhouse Brazil alone.

Indeed, latest numbers from the banking giant illustrated the degree of pent-up demand from this increasingly-affluent customer base — lending and customer funds in Brazil rose 17% and 12% in January-March respectively. With economic conditions in Santander’s established markets also improving, the City expects the firm to record earnings growth of 11% in 2015 and 12% next year, pushing a P/E readout of 12.4 times for the current period to 11 times for 2016. A multiple around or below 15 times is widely considered exceptional value.

Meanwhile, Santander’s pledge earlier this year to cut the dividend to 20 euro cents per share from around 60 cents in previous years still produces a healthy yield of 3.1%. And with the capital base now reinforced and earnings predicted to pump higher, I expect payments to march comfortably higher again.

GKN

I believe that diversified engineering play GKN (LSE: GKN) is in great shape to enjoy solid earnings expansion in the years ahead, as new aircraft and car demand boosts demand for the firm’s products. The company’s suite of market-leading components makes it a critical supplier to major manufacturers across these sectors, and GKN noted that its automotive operations enjoyed “growth above our markets” in its latest quarterly release.

The impact of slow sales in the military aircraft sub-sector, as well as weakening agricultural equipment demand, is expected to weigh in the near-term, however, and the City expects GKN to record a rare 6% earnings blip in 2015. Still, this drop is expected to prove a one-off, and the firm is anticipated to punch a solid 10% bounceback next year. As such GKN boasts ultra-attractive earnings multiples of 12.6 times for 2015 and 11.6 times for 2016.

At present GKN may not be the most lucrative income pick in town — the engineer carries yields of 2.5% and 2.7% for 2015 and 2016 respectively — but I expect payouts to tick resoundingly higher in the years to come as earnings growth picks up. Indeed, the predicted yield of 8.9p per share for this year is a decent upgrade from 8.4p in 2014, and this is anticipated to leap to 9.6p in 2016.

British American Tobacco

With macroeconomic headwinds in critical emerging markets showing signs of slowing, I reckon that British American Tobacco (LSE: BATS) will buck the will of regulators and keep on punching stunning profits growth in the years ahead.

The company’s power brands like Lucky Strike and Dunhill continue to keep revenues ticking higher despite falling volumes across the group, and I reckon that British American Tobacco’s rising footprint in the vapour market should put a fire under the top line, too. The cigarette maker is expected to follow last year’s 4% earnings slide with a modest bounceback in 2015, although a robust 8% improvement is chalked in for the following 12 months.

Such numbers create respectably-if-not-spectacular P/E ratios of 17.2 times and 16 times for these years. But I believe that British American Tobacco’s reputation as a go-to dividend stock should remain intact — indeed, projected payments of 155.7p per share for 2015 and 160.2p for 2016 carry huge yields of 4.4% and 4.5% correspondingly.

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Royston Wild owns shares of GKN. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.