The ultimate growth stock to buy for $100 right now

If you’re willing to travel far to find something “new” for your portfolio, you might want to try Not Holdings (NOT -0.07%) on for size. The fast-growing financial services provider is a rising star in its home country of Brazil. It is at the beginning of its expansion in Latin America and even has on board the biggest investor of our time.

Stock is not cheap. Expectations are high given its high value. However, if you’re okay with a high risk profile and are looking for a fintech stock that’s growing substantially faster than the big names in the US in this niche, consider a small position in Nubank’s Brazilian parent company. The stock is trading in the mid-teens, so even $100 can buy a handful of shares.

It’s a look No

The fintech stocks most investors know have been on the rise lately, but they’re still trading for a quarter of their all-time highs set three summers ago. Not a welcome exception to the rule. The stock has nearly quadrupled since the start of last year, currently trading within 1% of the stock’s all-time high last week.

Nu’s rapid rise in Brazil is turning heads. Nubank launched in Brazil only a decade ago, but 56% of the country’s adult population already has an account. It started with its now-iconic purple credit card, which offered the country’s largely unbanked citizens a payment option with no annual fees and often low spending limits at first. With its foot in the door, Nu found it easy to expand its offerings and take advantage of the improved purchasing power of its growing base.

There are no physical branches. Everything is managed through the app of the same name.

The combination of his growing audience and deepening relationship is generating quite explosive growth. Nubank’s user base currently stands at 104.5 million, a 25% increase over last year. However, its average monthly revenue per user increased by 30% to $11.20 during that time.

It stands to deliver $2.8 billion in its latest quarter, a 65% increase over last year. (The two biggest US fintech players grew their top lines by 8% and 19% for the same quarter.)

Let’s move to the other end of the income statement. It’s not a deficit speedster that sacrifices short-term profitability to make land grab headlines. It’s in black and the bottom line is growing even faster than the top line.

It costs an average of just $7 per month to acquire a new account and only costs $0.90 per month to maintain an account. Remember that average revenue of $11.20 per month per user? It means that a new customer is profitable by the end of the first month.

Adjusted net income soared 131% to $562.5 million in the second quarter, surpassing a 20% net margin for the first time. It probably won’t be the last time.

Image source: Getty Images.

Banking services outside Brazil

It’s been five years since Nu launched in Mexico and entered Colombia a year later. The dynamics are compelling.

When Nu launched its platform in Colombia — Latin America’s third most populous nation — in 2020, 70 percent to 85 percent of the country’s transactions were done in cash. Despite the fact that more than half of the country owns a smartphone and 72% of Colombians have access to the Internet, the country does not enjoy the convenience and security of credit cards.

Nu’s push into Mexico and Colombia is still early days and still not moving the needle. However, as it expands its product offering to include more banking products in new markets, the expansion is successful. Customer deposits in Mexico and Colombia are growing faster than in Nu’s home country.

It also didn’t attract some interest from an investor you should know. of Warren Buffett Berkshire Hathaway it entered just as the Brazilian fintech was poised to go public at $9 in 2021. It’s not your typical Buffett stock, but Berkshire Hathaway continues to own the stock. He’s obviously been a top scorer on the scoreboard since the start of last year.

Nu Holdings is not cheap. It’s currently trading at 47 times trailing earnings, but that drops to 24 if you look at the analyst’s profit target for next year. Its market capitalization is also larger than Brazil’s biggest traditional bank, but it’s clear that Nu has its sights set on more than just Brazil, if not eventually more than just Latin America.

Investing in Brazil is risky. Fintech is risky. There’s no such thing as a free lunch, but everywhere you look, it doesn’t look very appetizing, even after its strong run.