If a stock’s earnings ultimately determine its stock price, then buying stocks that promise massive earnings growth should lead to dramatic share price gains. It is why long-term investors should focus on the business of the companies they invest in and not worry about the noise of daily price movements.

If the business is healthy and growing, the stock is sure to follow over time. That’s why the two stocks below should be considered closely by investors. Wall Street is forecasting these companies are about to turn on the afterburners of profitability. They are expected to see earnings per share grow by a compounded annual growth rate of 50% on average over the next five years, a massive gain in traction.

And with businesses that have long tail fundamental growth prospects in front of them, they just might be two incredible stocks you will want to add to your portfolio today. As both trade at less than $15 a share, they might not be at such a low stock price for much longer.

Key Points About This Article:

• Stock prices tend to follow earnings over the long term, so finding stocks with exceptional long-term earnings growth forecasts suggests significant price appreciation is in the cards.
• The two stocks below are trading at very low prices considering the substantial growth prospects analysts forecast for their earnings, which averages around 50% annually.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Nu Holdings (NU)

Brazil-based digital bank Nu Holdings (NYSE:NU) is the first stock under $15 that is projected to see profits rocket higher over the long term. Shares are actually priced under $14 a stub but analysts peg EPS growth at 52.5% annually. There is good reason for the optimism.

The digitally native fintech stock is rapidly growing. Its selection of services for users includes checking accounts, credit cards, loans, brokerage services, and insurance. Customers in Brazil and, increasingly, in Mexico are flocking to the online bank.

It ended the second quarter with 104.5 million customers, up 20.8 million year-over-year (a 25% increase), and 5.2 million sequentially (up 5%). Revenue surged 65% in the period to $2.8 billion on a currency-adjusted basis while gross profits surged 88% from the year-ago quarter. Adjusted net income more than doubled to $562 million.

As Nu gains more customers, they are using more products and services. Where credit card usage used to account for 81% of Nu’s total portfolio, that has fallen to 76% with lending products representing nearly a quarter of the total, or $4.6 billion. Loan originations are also rapidly rising, up 78% year-over-year.

Although shares of Nu Holdings have doubled over the past year, the fintech still trades at just a fraction of its earnings growth. And despite Wall Street viewing NU stock as fairly valued, with the sort of earnings growth analysts are forecasting, expect the Brazilian online bank to quickly appreciate in value. 

Petco Health and Wellness (WOOF)

Petcare stock Petco Health and Wellness (NASDAQ:WOOF) also has a long runway of opportunity in front of it. According to the ​​American Pet Products Association, U.S. pet parents will spend $150.6 billion on their pets in 2024, a 2.4% increase from last year. Spending has grown 55% over the past five years and is up 157% over the past decade. 

Food and treats are what pet owners buy the most, or $64.4 billion, which represents 43% of the total. Another $38.3 billion goes toward veterinarian care and products. These are right in Petco’s wheelhouse.

What is pushing the spending higher is the ongoing trend of pet humanization. Dogs and cats no longer are simply domesticated animals, but rather are now considered a member of the family (I’m guilty of it, too, with my dog). Yet the impact is that owners are willing to spend up on their four-legged fur babies.

Although Petco’s stock is down 10% year-to-date, shares have more than doubled off the low point hit in May. The company is in turnaround mode following the pandemic boom and the business is gaining traction. Wall Street has taken notice. Where Petco’s earnings declined at a 25% rate over the last five years, analysts see it growing earnings 49% annually over the next five years. 

Petco is one of the largest pet service operators in the U.S with more than 1,500 locations. It also offers a growing network of on-site veterinary hospitals, as well as numerous mobile veterinary clinics. Operations are normalizing once more, making its stock that goes for less than $3 per share an intriguing buy.

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