Should You Buy Nu Holdings While It's Still Below $15?
American investors might not be too familiar with Nu Holdings (NYSE: NU). True, it's a large-cap company with a $65 billion market capitalization currently. And yes, Warren Buffett's Berkshire Hathaway owned a stake in it for about three years. But because it operates in Latin America, Nu probably flies under the radar for many here in the U.S.
This fintech stock has soared by an impressive 230% in the past three years (as of June 25), although it has taken investors on a volatile ride along the way. But should you buy shares right now while they trade below $15?
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Nu continues to grow at a brisk pace
Because of how mature the financial services industry is, there aren't that many companies in the space that are rapidly rising up through its ranks. Here's where Nu stands out. Its leaders saw an opportunity to target unbanked and underbanked populations in Latin America, providing them with a digital-first platform that offers bank accounts, brokerage services, credit cards, loans, and crypto trading, among other things.
As of March 31, Nu had 119 million customers, the vast majority of them in its home market of Brazil. The company now counts a remarkable 59% of that country's adult population as its customers. In the last three years, Nu has essentially doubled its customer base.
Nu also operates in Mexico and Colombia, both markets that have sizable potential. Combined, they have a population of 185 million people -- 13 times greater than the number of customers Nu has attracted so far in those countries.
The leadership team is optimistic. According to their estimates, Nu has only captured 5% of its gross profit total addressable market in Brazil. One key pillar of its growth playbook is to constantly innovate. Nu just launched a service offering private payroll loans in Brazil, taking on the established players in that part of the industry.
It also has a travel service (NuTravel) and a mobile phone service (NuCel). These initiatives clearly show its willingness to venture beyond financial services. It might have plans to enter other new markets down the road, further expanding revenue potential. However, so far, executives are playing it close to the vest.
Sensitive to external forces
Because Nu's growth has been so spectacular, investors might overlook the fact that this is still a bank at its core. And that means that Nu is heavily exposed to certain factors outside of its control.
Interest rates are one thing to keep in mind. No one can reliably predict with any level of precision what direction interest rates are headed in over the longer term. But rate hikes and cuts can have profound impacts on Nu's revenue and earnings. A recession or economic downturn would also spell trouble for the bank, as demand for loans would fall, delinquencies would rise, and spending activity would take a hit.
Nu's operations are entirely in Latin America, which is still a developing region. On the one hand, that's an advantage, as it provides Nu with a huge opportunity to expand its offerings, bring on new customers, and ride the wave of GDP growth and smartphone/internet penetration.
On the other hand, developing economies are prone to volatility. For instance, Brazil's economy is dependent on commodity exports, which can be influenced by market prices that can negatively impact GDP. There are other issues as well, like political instability and corruption. These elements can make running a successful financial services enterprise difficult.
Nonetheless, Nu has performed exceptionally well in the face of these ongoing risks. Its revenues have soared, and so have its profits. Diluted earnings per share jumped 47% year over year in Q1, and analysts are forecasting that this key metric will increase at an annualized pace of 36% between 2024 and 2027.
With shares trading at a forward P/E ratio of 23.5, investors should consider buying this fintech stock while it's still below $15.
Should you invest $1,000 in Nu Holdings right now?
Before you buy stock in Nu Holdings, 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 Holdings wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!*
Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of June 23, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
5 hours ago
- Globe and Mail
Billionaire Bill Gates Has 66% of His Foundation's $45 Billion Portfolio Invested in 3 Outstanding Stocks
Bill Gates is one of the wealthiest people in the world, with a net worth exceeding $100 billion. What makes that even more impressive is that he's donated more than $60 billion of his wealth to the Gates Foundation, established in 2000. Much of those donations have come straight from Gates' personal portfolio, which includes a significant stake in Microsoft (NASDAQ: MSFT), the company he founded, as well as several important diversifying investments. Outside of Microsoft, Gates appears to be an investor focused on value, taking lessons from his longtime friend and former Gates Foundation donor and trustee, Warren Buffett. As a result, the Gates Foundation portfolio reflects the combination of Gates and Buffett's investment styles, including maintaining a highly concentrated portfolio of top investments. As such, nearly two-thirds of the foundation's trust fund is held in just three outstanding stocks. 1. Microsoft (31.1%) Gates first donated Microsoft stock to the foundation upon its founding in 2000, and he's steadily added more shares over time. And while the foundation has often sold some of its shares to fund grants, it's managed to build a substantial stake in the tech company. As of the end of the first quarter, the trust held about 28.5 million shares. Those shares are worth more than $14 billion as of late June. Microsoft stock has soared to an all-time high in recent weeks on the back of its strength in artificial intelligence (AI). After a $10 billion investment in OpenAI in early 2023, Microsoft's Azure became the leading cloud computing platform for developers looking to take advantage of leading-edge AI models. It's exhibited market-leading growth since then, including 33% growth in its most recent quarter. What's more, Microsoft management says the business remains supply constrained as demand remains high, so it's likely to maintain that growth rate for some time. Microsoft has also benefited from integrating AI into its enterprise software business. Microsoft 365 commercial revenue has grown at a double-digit pace, bolstered by selling more seats at higher average prices. Microsoft has developed specialized AI assistants, or Copilots, for applications, including GitHub and Dynamics 365, which help businesses get more out of the software. It also offers a Copilot Studio, which allows businesses to use their own data to create specialized AI assistants. As a result, Microsoft has seen strong revenue growth and even better profit growth as its margins expand. And with Azure leading the company going forward, that should only continue, going forward. Investors will have to pay a premium price for the stock right now, with its forward P/E of about 37. But with a massive cash cow of its enterprise software business supporting the rapid expansion and growth of its cloud computing business, it looks like it's worth the premium price. 2. Berkshire Hathaway (18.4%) As mentioned, Warren Buffett has been a longtime donor to the Gates Foundation. In fact, his total investments since 2006 come to more than $43 billion. And when Buffett donates to non-profits, he donates Class B shares of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). Buffett maintains control of the company by converting super-voting Class A shares to Class B shares before donating. Buffett requires the Gates Foundation to pay grants equal to the amount he donates every year plus an additional 5% of the trust's assets. Nonetheless, Gates has managed to hold onto a significant number of Berkshire Hathaway shares. As of the end of the first quarter, the trust held 17.1 million shares. Those are worth about $8.3 billion. Berkshire is a holding company that includes several owned and operated businesses. As a group, those businesses have been executing at a high level. That said, the biggest segment, insurance, struggled due to natural disasters like the California wildfires. Overall, that led to some disappointing first-quarter results. The bulk of Berkshire's value stems from its publicly traded equity portfolio and cash. The total value of its liquid investments sits around $631.8 billion. Over half of that is in Treasury bills or cash as Buffett looks for something he can buy at a good value. That's an increasingly difficult task as Berkshire's size leaves only a handful of companies as viable options for Berkshire to take a stake in. Shares of Berkshire have fallen since Buffett announced his retirement from the CEO position effective Jan. 1, 2026. It now trades at a price-to-book ratio of 1.6. That price is still historically expensive for Berkshire, though, and Buffett has neglected to buy back shares at that valuation over the last several quarters. That said, Berkshire may deserve to trade for a higher multiple, given that it's currently unleveraged (not utilizing the insurance float for investments) and sitting on a ton of cash. 3. Waste Management (16.2%) Most of the other stocks held by the Gates Foundation trust reflect the value-investing ideas that made Warren Buffett so successful. Waste Management (NYSE: WM) may be the most emblematic of that. Waste Management has been a staple of the portfolio since 2002. The long-term buy-and-hold position has steadily increased in value over the years with limited share sales. The trust held 32.2 million shares at the end of the first quarter. Those are worth about $7.3 billion as of this writing. What makes Waste Management appealing is its tremendous competitive moat. It holds an unmatched portfolio of landfills, which is impossible to match due to the high bar required to receive a permit for new landfills. As such, many smaller waste haulers pay Waste Management to use its landfills. Waste Management also benefits from scale, which allows it to create denser pickup routes and get more out of its operations. As a result, the company sports strong profit margins. With its excess cash, the company has been able to grow through acquisition. The most recent of which is Stericycle, which is now called WM Healthcare Solutions. At its most recent investor day, management predicted $50 million in cross-selling opportunities with Stericycle in addition to its $250 million in cost synergies. Management also sees revenue growth accelerating to about 9% per year with expanding earnings before interest, taxes, depreciation, and amortization (EBITDA) margins through 2027. That will support strong free cash flow growth, which management can use for additional tuck-in acquisitions, its growing dividend, or share repurchases. With an enterprise value of about 15 times the expected EBITDA over the next 12 months, the shares look fairly priced and could be a good opportunity for a dividend growth investor looking for companies with strong free cash flow growth potential. Should you invest $1,000 in Microsoft right now? Before you buy stock in Microsoft, 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 Microsoft wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Adam Levy has positions in Microsoft. The Motley Fool has positions in and recommends Berkshire Hathaway and Microsoft. The Motley Fool recommends Waste Management and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
12 hours ago
- Globe and Mail
Investing $25,000 in These 2 Warren Buffett Stocks Will Generate $1,200 in Annual Passive Income
Investing can be extremely volatile, as experienced this year when the market fell into bear market territory from its highs in February. After recouping those losses it's now approaching near all-time highs. That's why investors may want to consider adding some dividend stocks that can generate reliable passive income each year. There's no better place to look than in the portfolio of Berkshire Hathaway, the conglomerate run by Warren Buffett that has generated market-crushing returns for over six decades. Investing $25,000 in these two Warren Buffett stocks will generate roughly $1,200 in annual passive income. Chevron: 4.77% dividend yield Buffett and his team of investors have been piling into oil and gas stocks in recent years. One of those is the Houston, Texas-based Chevron (NYSE: CVX), which is now the fifth-largest position in Berkshire's massive $283 billion equities portfolio, making up 6% of the portfolio. Chevron operates extensive upstream and downstream oil operations with a significant presence in the Permian Basin, and plans to ramp up wells and other projects worldwide. In the Permian Basin, Chevron is projecting 5% to 6% compound annual growth in oil production, along with declining capital expenditures that will lead to $2 billion of free cash flow growth by 2026. Overall, Chevron expects to increase total free cash flow by $9 billion by 2026, assuming Brent Crude Oil per barrel is in the $60 range. Chevron also hopes to further integrate alternative sources of energy in its business, like renewables, hydrogen, and carbon capture and storage, while lowering the carbon intensity of its downstream operations. In addition, the company is a proven dividend payer, having increased its dividend for 38 straight years and paying an extremely healthy dividend yield of nearly 4.8%. With a 12-month trailing free cash flow yield of nearly 5.3%, Chevron can cover its dividend. Remember, the company expects to significantly increase free cash flow between now and 2026. Furthermore, Chevron is repurchasing $10 billion to $20 billion in stock per year, which is also a way to return capital to shareholders. Sirius XM: 4.80% dividend yield The large digital audio operator Sirius XM (NASDAQ: SIRI) has been a dismal investment over the last five years, with the stock down about 59%. The company, which owns Sirius Satellite Radio and the Pandora streaming service, has struggled to grow subscribers amid rising competition from major players like Spotify. However, Buffett and his team are betting big that management can right the ship, buying up over 35% of outstanding shares. Sirius' management team has a long-term plan to grow subscribers from 40 million to 50 million and free cash flow by 50% from $1.2 billion to $1.8 billion. The plan involves building new in-car technology and launching a new pricing structure. Management also plans to grow its advertising business and has purchased the exclusive advertising and distribution rights of several big-name podcasts. Seaport Global analyst David Joyce earlier this year noted the company is a relatively safe pick for investors concerned about tariffs because it has a sticky subscriber base of mainly U.S. consumers. Furthermore, ad revenue still only makes up 20% of Sirius' business and could provide a runway for growth. The company has a high dividend yield of 4.8% and has paid and increased its dividend every year since 2016. Sirius' trailing-12-month free cash flow yield in excess of 12% should make the dividend easy to cover and increase each year, and Sirius is also conducting share repurchases. The turnaround will require patience, but management has a plan; the stock is cheap, trading at less than 8 times forward earnings, and investors will be well compensated while they wait. Should you invest $1,000 in Chevron right now? Before you buy stock in Chevron, 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 Chevron wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025
Globe and Mail
14 hours ago
- Globe and Mail
This Top Warren Buffett Holding Could Outperform the S&P 500 in the Second Half of 2025, According to Certain Wall Street Analysts
Warren Buffett is widely regarded as one of the greatest investors of all time. He has a public track record of over 70 years to back that up, generating massive market-trouncing returns over that time. His company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has continued to outperform the S&P 500 (SNPINDEX: ^GSPC) in 2025. That's despite the fact that Buffett's retirement announcement in May has somewhat deflated the premium investors are willing to pay for shares. That speaks to the strength of Buffett's portfolio of investments, including owned and operated businesses, marketable equities, private issues, and bonds. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » While Buffett expects everything his company buys to outperform over the long run (why else would he buy it?), one of Berkshire's biggest holdings looks particularly well-positioned to do so in the near term. That's backed up by analysis from Morgan Stanley 's team of market analysts led by Lisa Shalett. Here's the Buffett investment that could outperform over the rest of the year. Buffett's selling many of his top stocks It's worth pointing out that Buffett has had a hard time identifying great opportunities in the stock market recently. Not only that, but he's consistently sold many of Berkshire's biggest marketable equity holdings, including Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), and Citigroup (NYSE: C). That said, Buffett hasn't said that he sees significant challenges developing at any of those companies. Apple notably remains Berkshire's largest marketable equity holding, accounting for about 21% of the portfolio. Bank of America remains third in line with more than 10% of the $283 billion portfolio invested in the bank stock. Buffett did cut Citi entirely, though. The challenge for Buffett in holding those stocks appears to be a matter of valuation. Apple's price-to-earnings ratio when Buffett made Berkshire's initial investment in the stock was between 10 and 11.3. Today, it trades for 31 times trailing earnings, and it consistently traded higher throughout the second half of last year. When it comes to bank stocks, Buffett has mentioned that the new accounting rules requiring banks to mark assets to market make it difficult to assess the financial reality of their balance sheets. As a result, he's less comfortable holding companies like Citi, and he's slowly selling off harder-to-value financial stocks. It's not just those three that Buffett's been selling. In fact, Berkshire's been a net seller of stocks for 10 straight quarters. Total sales during that period add up to more than $174 billion in excess of Berkshire's stock purchases. While some of that cash went toward paying a record corporate tax bill last year, the vast majority has gone into a single investment vehicle: short-term U.S. Treasury bills. Berkshire Hathaway held over $314 billion of U.S. Treasury bills as of the end of the first quarter. Morgan Stanley analysts think that's a smart place to stash cash in the current financial market environment. In fact, they think there's a good chance T-bills outperform the S&P 500 through the end of the year. An extremely low-risk bet to beat the market One of the biggest reasons analysts think government bonds offer a better investment than the S&P 500 right now is that the premium investors get for taking on the risk of equities is extremely low. Shalett and her team say the equity-risk premium sits near a 20-year low. With the earnings yield (the inverse of the price-to-earnings ratio) on the S&P 500 sitting around 4.7%, that's not a lot higher than the 4.3% investors can receive on 10-year Treasuries. One-month to six-month yields also range between 4.1% and 4.3% as of June 25. Meanwhile, there seems to be a lot of risk involved with buying equities right now, considering the ongoing conflicts in the Middle East and unpredictable U.S. trade policies. Further supporting the short-term value of Treasury bills are proposed regulatory changes, says Shalett. The Federal Reserve proposed adjusting the supplementary leverage ratio for banks. If banks can take on more Treasury bills on their balance sheets, it should support a higher debt ceiling without a rise in interest rates (thus supporting the value of current bond issues). Additionally, the Genius Act supports the creation and issuance of stablecoins, which are typically backed by U.S. Treasuries, adding more bidders to the auction. But it's important for investors to keep in mind that these are short-term factors. The equity risk premium is unlikely to stay this low for very long, especially if the above factors and the Fed's plans to eventually lower the Fed Funds Rate push yields lower over time. Despite the fact that Buffett has more money in Treasuries than marketable equities right now, he'd still prefer Berkshire's money to go into stocks. "Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities," Buffett wrote in his 2024 letter to shareholders. The challenge for investors is finding good value in the current market. That's an even bigger challenge for Buffett, who's not very interested in opportunities where he can only invest a few billion dollars. The good news for smaller investors is that small- and mid-cap stocks trade at much more attractive valuations than large-cap stocks. So, while the large-cap S&P 500 index doesn't look that attractive right now, there are plenty of opportunities among smaller companies. Should you invest $1,000 in S&P 500 Index right now? Before you buy stock in S&P 500 Index, 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 S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
