Time to Buy the Dip on Nu Stock?

Nu Holdings (NYSE: NU) has underperformed the marketplace during the past year, up little than 1% portion the S&P 500 is up 10%. However, it's starting to bounce back. Is present the clip to buy?

Nu provides integer banking and fiscal services successful Brazil, Mexico, and Colombia. It has carved retired a niche by opening successful a portion with important introduction barriers for banking customers, and members are drawn to Nu's easiness of use. It reports accordant coagulated quarterly growth, and the regions wherever it operates inactive person small integer fiscal access, giving it a steadfast runway.

In the 2024 4th quarter, gross accrued 50% twelvemonth implicit twelvemonth currency neutral, and nett income roseate from $360.9 cardinal to $552.6 million. Cost to service remained unchangeable 4th implicit 4th astatine $0.80 per customer, which was a alteration from $0.90 the twelvemonth before.

Nu was primitively created to conscionable the needs of a wide colonisation that wasn't capable to entree Brazil's highly regulated and costly banking system, but it's catching connected with anyone who is looking for a amended banking experience. Although it already has 58% of the big colonisation of Brazil arsenic customers, it continues to adhd 1 cardinal caller members monthly, and 61% of its monthly actives usage Nu arsenic their superior banking account. Nu is present the third-largest slope successful Brazil successful presumption of members, but there's truthful overmuch much maturation to seizure successful Brazil. For example, Ultravioleta customers, its affluent user service, accrued 132% twelvemonth implicit year, but the fig is inactive tiny astatine 688,000.

Nu's has conscionable a humble beingness successful Mexico and Colombia, wherever it launched aft Brazil and it inactive doesn't person afloat operations. It rolled retired a high-rate savings relationship successful these 2 markets that's attracting caller members, and maturation is faster determination than successful Brazil. It ended 2024 with 10 cardinal customers successful Mexico, a 91% year-over-year increase, oregon 12% of the big population. Down the line, determination are galore different adjacent countries Nu tin participate that don't person optimal fintech solutions.

Nu is simply a Warren Buffett stock, though it doesn't rather acceptable the classical Buffett mold, since it's a young maturation stock. He does emotion slope stocks, but there's thing other notable astir Nu that Buffett has mentioned respective times that's important successful a large business: A precocious instrumentality connected equity (ROE). Nu's low-overhead exemplary yields precocious profits, and Nu's ROE was 28% successful 2024, placing it successful the apical tier of fiscal institutions worldwide.