The market’s having a wild ride to date in 2025, and the S&P 500 briefly entered correction territory last week before swinging back up. For brand new investors, it could possibly be a scary time. But seasoned investors know that not only is that this par for the course, there is a silver lining: Yow will discover excellent stocks at terrific prices.
Nu Holdings (NYSE: NU) has underperformed the market throughout the past 12 months, up lower than 1% while the S&P 500 is up 10%. Nevertheless, it’s beginning to bounce back. Is now the time to purchase?
Nu provides digital banking and financial services in Brazil, Mexico, and Colombia. It has carved out a distinct segment by opening in a region with significant entry barriers for banking customers, and members are drawn to Nu’s ease of use. It reports consistent solid quarterly growth, and the regions where it operates still have little digital financial access, giving it a healthy runway.
Within the 2024 fourth quarter, revenue increased 50% 12 months over 12 months currency neutral, and net income rose from $360.9 million to $552.6 million. Cost to serve remained stable quarter over quarter at $0.80 per customer, which was a decrease from $0.90 the 12 months before.
Nu was originally created to fulfill the needs of a mass population that wasn’t in a position to access Brazil’s highly regulated and expensive banking system, nevertheless it’s catching on with anyone who’s on the lookout for a greater banking experience. Even though it already has 58% of the adult population of Brazil as customers, it continues so as to add 1 million recent members monthly, and 61% of its monthly actives use Nu as their primary banking account. Nu is now the third-largest bank in Brazil by way of members, but there’s so rather more growth to capture in Brazil. For instance, Ultravioleta customers, its affluent consumer service, increased 132% 12 months over 12 months, however the number remains to be small at 688,000.
Nu’s has only a modest presence in Mexico and Colombia, where it launched after Brazil and it still doesn’t have full operations. It rolled out a high-rate savings account in these two markets that is attracting recent members, and growth is quicker there than in Brazil. It ended 2024 with 10 million customers in Mexico, a 91% year-over-year increase, or 12% of the adult population. Down the road, there are various other adjoining countries Nu can enter that haven’t got optimal fintech solutions.
Nu is a Warren Buffett stock, even though it doesn’t quite fit the classic Buffett mold, because it’s a young growth stock. He does love bank stocks, but there’s something else notable about Nu that Buffett has mentioned several times that is crucial in an amazing business: A high return on equity (ROE). Nu’s low-overhead model yields high profits, and Nu’s ROE was 28% in 2024, placing it in the highest tier of economic institutions worldwide.