NU - Cathie Wood Is Buying These Top Growth Stocks - Both Could Make You Rich Over Time
2024-01-17 20:00:00 ET
Cathie Wood is among the most famous investors on Wall Street today. Wood primarily invests in high-growth companies with cutting-edge technologies that have the potential to deliver outsized gains to shareholders over time.
Investing in growth stocks is quite risky, as was evident during the bear market of 2022. Due to steep valuations surrounding tech stocks, several companies saw their market caps fall by more than 50%.
Wood’s flagship fund, the Ark Innovation ETF , fell roughly 65% in 2022. But as market sentiment improved, the exchange-traded fund (ETF) soared 67% in 2023.
So, if you have a high-risk appetite, here are two Cathie Wood stocks you can consider buying today.
Nu Holdings stock
A Brazil-based company, Nu Holdings ( NYSE:NU ) offers digital banking services. Nu Holdings is the parent company of Nubank, an online bank that has gained massive traction in Brazil.
Valued at US$43 billion by market cap , Nu Holdings has recorded sales of almost US$5 billion in the last 12 months and continues to grow at an enviable pace.
Nu increased sales by 53% year over year in the third quarter (Q3) of 2023. Its revenue growth was driven by an 18% increase in average revenue per customer and a 27% growth in total customers. Due to an asset-light model, Nu’s gross profit rose over 100% year over year in Q3 while net income grew by 400%. Moreover, Nu has reported an adjusted net income for five consecutive quarters.
Analysts expect Nu Holdings to grow revenue by 35% to US$10.7 billion while earnings growth is forecast at 67% in 2024. So, priced at four times sales and 23 times forward earnings , Nu stock is very cheap and has massive upside potential.
Nu can continue to expand and diversify its revenue streams while gaining market share in other Latin American markets, including Mexico and Colombia. It can also target growth in other developed economies in the U.S., Canada, and Europe.
MercadoLibre stock
Another Brazil-based company, MercadoLibre ( NASDAQ:MELI ) is valued at US$84.5 billion by market cap. Founded in 1999, MercadoLibre went public in 2007 and has since returned a whopping 5,900% to shareholders, easily thumping the broader markets.
MercadoLibre is an e-commerce company operating in 18 countries, including Brazil, Mexico, and Argentina.
Similar to other e-commerce companies, the COVID-19 pandemic acted as a tailwind for MercadoLibre, allowing it to enjoy triple-digit sales growth for five consecutive quarters. While revenue growth has decelerated, the company still increased sales by 69% year over year in Q3 of 2023.
MELI’s fintech business is a key driver for the company, as total payment volume grew 121% year over year in Q3. In addition to online payments and other financial services, the fintech business also has a growing credit business.
Wall Street expects sales to grow from US$10.54 billion in 2022 to US$17.4 billion in 2024. Its adjusted earnings are forecast to widen from US$9.53 to US$34.26 in this period. So, priced at 49 times forward earnings, MELI stock might seem expensive. However, its stellar growth estimates make MercadoLibre a top growth stock to own in 2024.
The post Cathie Wood Is Buying These Top Growth Stocks — Both Could Make You Rich Over Time appeared first on The Motley Fool Canada .
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends MercadoLibre and Nu. The Motley Fool has a disclosure policy .
2024