CryptoCurrency
This Growth Stock Is a Buy
Warren Buffett and Cathie Wood typically don’t agree on much when it comes to assembling a portfolio. Only rarely have they owned the same company.
But there’s one growth stock that both of these investors love — Latin American fintech Nu Holdings (NYSE: NU) — so much so that they have invested nearly $1.5 billion combined into the business. And yet many investors have never heard of this company.
You can use this ignorance to your advantage by snapping up shares at an incredible discount.
This growth stock is a proven winner
It’s not often that you can buy a proven growth stock at a reasonable valuation, nonetheless a discounted valuation. That’s because once a growth trajectory has begun, the market rushes to price that proven potential into the stock.
This is, in part, what makes growth investing so challenging. You can buy and hold a stock that grows revenue by 500% over your holding period. But if the market had been pricing in 600% growth, you could still end up underperforming the market.
How do you get a discount on a proven growth stock? Just look at one that the market is ignoring — like Nu Holdings. And that might be the reason shares trade at just 32 times forward earnings, even though its bottom line has skyrocketed in recent years.
The issue for Nu isn’t a lack of famous investors. Buffett owns a bit more than $1.4 billion in shares through his holding company, Berkshire Hathaway — a position it has held since Nu’s initial public offering (IPO) in 2021. And through her company ARK Invest, Cathie Wood owns around 1.5 million shares of Nu, worth roughly $20 million.
The issue isn’t scale, either. Right now, Nu has more than 100 million customers. The issue is simply that Nu operates in just three countries: Brazil, Mexico, and Colombia. Unless you live in one of these nations, you likely have never heard of Nu — and certainly have never used its services.
What exactly is Nu’s business? It’s a fintech that offers a suite of financial services directly to customers through their smartphones. This might not sound so innovative today, but it was in Latin America in 2013.
Back then, a few stodgy incumbents controlled most of Latin America’s banking industry. Nu took the market by storm, offering more advanced services at a lower cost, available to anyone instantly through the device in their pocket.
There was clearly a lot of pent-up demand. Nu’s customer base went from essentially zero to more than 100 million over its first decade in business. And new product lines like its crypto trading platform surpassed 1 million users in its first month of operation.
Suffice it to say that the financials look great for Nu. Two years ago, its sales base had just surpassed $2 billion. Today, it’s approaching $8 billion. Meanwhile, earnings have flipped positive — a trajectory that is likely to be sustained for years to come. Over the next five years, for example, analysts expect earnings to grow at an average of 54% annually.
Should you follow Wood and Buffett into Nu stock?
Nu has an incredible story, a proven track record, and a reputable platform to build on. And its valuation — just 32 times forward earnings — is almost too good to pass up.
Just don’t think this will be a smooth ride. After its IPO, Nu shares actually lost 70% of their value over the first year of trading. Shares have completely rebounded since, but it’s a good reminder than rapid-growth stocks are often at the mercy of market volatility. The multiples assigned to these companies can vary widely based on market sentiment.
Like Buffett and Wood, I’m a big fan of Nu Holdings as an investment. But as with most stocks, it will be patience that ultimately generates the biggest returns. Don’t buy unless you’re willing to hold through the downward swings.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,022!*
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Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,329!*
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Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $393,839!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 7, 2024
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
Warren Buffett and Cathie Wood Agree: This Growth Stock Is a Buy was originally published by The Motley Fool
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UK based foreign exchange brand Travelex has announced that the company has undertaken a major expansion in the UAE, with the launch of 13 new stores across Abu Dhabi and Dubai airports.
At Zayed International Airport, Travelex is doubling its store footprint from seven to 14 stores, including six new on-the-move kiosk (OTM) locations at arrivals baggage, airside departures and pre-immigration, and one new traditional landside store. The new landside store will offer both a cash management service that will enable the airport’s businesses to process cash, as well as traditional consumer cash services, including access to 62 currencies.
Travelex initially entered Zayed International Airport in late 2023 with seven stores and eight ATMs. The new stores reflect the growing passenger demand and customer requirements of the UAE’s newest airport. As a dominant force in the capital’s aviation sector, Zayed International Airport rapidly affirmed itself as a key hub for air travel, solidifying its position as a vital player in the global travel landscape.
At Dubai International (DXB), Travelex is in the process of launching six new stores across all three terminals, including new traditional stores and stores upgraded from OTMS. Two ATMS dispensing AED were also installed at Terminal 3 Arrivals earlier this year. DXB has also seen a considerable post-pandemic growth in pax numbers, reinforcing its status as a leading hub for international travel.
The 13 new stores across Abu Dhabi and Dubai means Travelex will be operating 60 locations across the country. The latest IATA figures show that Middle Eastern airlines saw a 9.6% year-on-year increase in demand for June 2024, while capacity increased 9.4% year-on-year.
Batu Dölay, Managing Director, Travelex Middle East and Türkiye said:
“We’re delighted to be expanding our presence at two of the most exciting and dynamic airports in the world. This investment reflects the growing global reach and passenger numbers of our UAE airport partners, and our commitment to providing even greater access to international travel money than ever before.”
About Travelex
Founded in 1976 Travelex has grown to become one of the market leading specialist providers of foreign exchange products, solutions, and services, operating across the entire value chain of the foreign exchange industry in more than 20 countries. We have developed a growing network of ATMs and stores in some of the world’s top international airports, major transport hubs, premium shopping malls and city centres.
Travelex has built a growing online and mobile foreign exchange platform, and we also process and deliver foreign currency orders for major banks, travel agencies, supermarkets and hotels worldwide. In addition, we source and distribute sizeable quantities of foreign currency banknotes for customers on a wholesale basis – including central banks and international financial institutions. We also offer a range of remittance and international money transfer products around the world.
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