NU - Nu Holdings: High-Quality Undervalued Growth Stock To Buy Today

2024-04-24 11:50:13 ET

Summary

• Nu Holdings Ltd. is a digital banking platform with a $50 billion market cap, based in São Paulo, Brazil.
• In Brazil, Nu Holdings serves >87 million customers, representing over 1/2 the country's adult population. The company now seems to be trying to expand the same way to Mexico.
• A combination of a growing TAM, growing top line, and expanding margins should give NU more room to move higher, in my view.
• In 3 years, NU should trade at a P/E of 13.7, with an EPS CAGR of ~28.22% over that period.
• The growth potential I've calculated today is over 40% more than the current stock price. I therefore rate NU stock as a "Buy" today.

Based on Seeking Alpha's description, Nu Holdings Ltd. ( NU ) is a $50-billion market cap digital banking platform based in São Paulo, Brazil, serving customers across Brazil, Mexico, Colombia, Cayman Islands, Germany, Argentina, the United States, and Uruguay and offering a wide range of financial services including spending solutions, savings accounts, investing options, borrowing solutions, and insurance policies. Looking at the number of active users and customers, the company itself states in its most recent 20-F filing that it's "one of the world's largest digital banking platforms and one of the leading technology companies in the world." And it becomes quite difficult to dispute this when we look at the dynamics of the number of these customers in recent years :

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