Nu Holdings (NYSE: NU) stock has had an impressive run over the past year, up more than 150%. But if you’re interested in this superstar stock, don’t despair. It’s just getting started, and it’s likely to keep up the fabulous performance. Here’s why.
Brazil is going digital
U.S. Investors may have heard of Nu but probably aren’t familiar with its platform since it operates in Brazil, Mexico, and Colombia. But “operates” doesn’t begin to tell the story of how Nu is practically taking over the financial services industry in its home country of Brazil, where it already has more than half of the adult population as account holders for its all-digital banking services.
Nu has been demonstrating outstanding growth, with revenue increasing at a compound annual growth rate (CAGR) of 82% over the past two years, and net income up from $58 million last year to $361 million this year.
But past performance is no guarantee of future results, so investing in Nu means having confidence that this will continue. As digital takes hold of Brazil, Nu is well-positioned to keep up its growth. Nu offers a large array of digital financial services that feed into this growth and will benefit from it.
One of the main drivers of its growth is cross-selling new products to current customers, leading to higher average revenue per active customer (ARPAC). As digital transactions grow in Brazil, much of it will flow through Nu’s channels, powered by the new customers and more transactions through its products.
Nu has moved from primarily addressing pain points for a lower socioeconomic demographic to targeting a more affluent population, and purchase volume more than doubled year over year in 2023’s fourth quarter for its Ultravioleta credit card aimed at high-income earners.
Over the next five years, expect Nu to demonstrate high growth and a soaring stock price.
Should you invest $1,000 in Nu right now?
Before you buy stock in Nu, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nu wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of March 21, 2024
Jennifer Saibil has positions in Nu. The Motley Fool recommends Nu. The Motley Fool has a disclosure policy.
Prediction: Nu Stock Will Soar Over the Next 5 years. Here’s Why was originally published by The Motley Fool