Investors constantly seek opportunities with significant long-term growth potential, and two stocks currently priced under $15 have caught the attention of Wall Street analysts. These stocks are expected to achieve an average annual earnings growth rate of 50% over the next five years, making them attractive options for those looking to build their portfolio with high-potential assets.
In past analyses, stocks with robust earnings growth have shown substantial price appreciation over time. Historical data indicates that companies with a strong business model and growing customer base tend to see their stock prices rise as their earnings increase. The stocks discussed in this article fit this pattern, showing promising signs of future growth backed by solid financials and market demand.
Market trends also reflect a similar sentiment. Companies that have expanded their services and customer base have seen positive stock performances, even if their current stock prices are relatively low. This pattern suggests that the stocks mentioned below could follow a similar trajectory, offering significant returns to investors over the long term.
Nu Holdings (NU)
Nu Holdings, a digital bank based in Brazil, is priced under $14 per share but is projected to have an annual EPS growth of 52.5%. The bank offers a range of services such as checking accounts, credit cards, loans, brokerage services, and insurance, primarily to customers in Brazil and Mexico. With a customer base that grew to 104.5 million by the end of the second quarter, Nu Holdings has shown impressive revenue and profit increases.
As the customer base expands, usage of various banking products and services has diversified. Credit card usage, which used to dominate Nu’s portfolio, has decreased to 76%, with lending products now forming a significant portion. Despite the doubling of its share price over the past year, the company’s earnings growth suggests that the stock is still undervalued.
Petco Health and Wellness (WOOF)
Petco Health and Wellness, another stock with a promising future, caters to the growing pet care market in the U.S. Spending on pets is expected to reach $150.6 billion in 2024, driven by the trend of pet humanization. Petco, with its extensive network of over 1,500 locations and growing on-site veterinary services, is well-positioned to benefit from this trend.
Petco has experienced a stock price increase after hitting a low earlier this year, and analysts forecast a 49% annual growth in earnings over the next five years. The company’s turnaround efforts post-pandemic have started to show positive results, making its current stock price of less than $3 per share an attractive option for investors.
Both Nu Holdings and Petco Health and Wellness present compelling cases for investment due to their strong growth prospects and current undervaluation. Investors looking for high-potential stocks at affordable prices may find these options particularly appealing. Their projected earnings growth and expanding market presence suggest significant upside potential over the coming years.
