The market continues to be volatile amid plans by the Trump administration to impose huge new tariffs on imports. The broad-market S&P 500 is down almost 8% so far this year, and the tech-heavy Nasdaq Composite is down by more than 14%.
There's fear in the air on Wall Street. But one of the most important tenets of good investing is not to panic sell. Troubled economic times have happened in the past, and the U.S. market has always eventually rebounded from them to reach new heights. With that in mind, the better long-term strategy is to try to look past the fear and focus on the opportunities, as there are some amazing stocks on sale now. If you have even $100 to invest now, Nu Holdings(NYSE: NU) and SoFi Technologies(NASDAQ: SOFI) are top growth stocks you may want to buy on the dip.
A digital banking leader in Latin America
Nu has the status of being a Warren Buffett stock, and it's the rare growth stock in the Berkshire Hathaway portfolio. Since Buffett tends to shy away from growth stocks and tech stocks, his investment here should be an indication that Nu isn't just any ordinary growth stock.
It's a classic fintech stock, disrupting the status quo in consumer banking by offering a much better and less expensive user experience through its all-digital app. It's highly profitable and still growing by leaps and bounds, and it's entering new markets. In other words, it has tons of opportunity.
First, it's resonating with the people who are choosing it as their banking platform. And customers are using it as their primary banking platform in increasing numbers. It started as a tool to help Brazil's underbanked population -- many of whom were closed out of the country's highly regulated banking system -- to get access to financial services. But it has become so popular that even the affluent are signing up.
As of the end of 2024, 58% of Brazil's adult population had a Nu account, and 61% were using it as their primary account. Lest that sound like it has already saturated the market, it continues to add more than 1 million users each month in Brazil alone.
It also generates growth through upselling, cross-selling, and increasing customer engagement with the platform. It has an 84% engagement rate, and that number has been steadily climbing. It offers a full menu of services including bank accounts, credit cards, other credit products, insurance, and more. Average revenue per active user has been steadily rising (on a currency-neutral basis), and reached $10.70 in the fourth quarter, up from $10.60 the year prior.
It's also making headway in its other markets, which right now include Mexico and Colombia. It still hasn't fully rolled out in those countries, but it's gaining steam, and it surpassed 10 million customers in Mexico last year.
Total revenue increased by 50% in 2024, and net income was up from $361 million to $553 million. There's every reason to expect it to keep achieving high growth.
Nu Holdings stock is more than 35% off of its late 2024 high and trades at a bargain one-year forward P/E ratio of 13, so this is an excellent time to open a position or add shares to your portfolio.
A digital banking leader in the U.S.
SoFi is similar to Nu, but it operates in the U.S. and has a large loan segment. It's also adding members at a rapid pace, as customers are drawn to its easy-to-use digital app, and it turned its first annual profit last year.
Since its roots are as a lending co-op for grad students, loans are still its largest segment, and students and young professionals make up its core customer base. These are lucrative target demographics because they are just getting started on their financial journeys and have long roads ahead to increase their engagement with SoFi's platform, which will generate higher revenue for the bank. Direct deposits are responsible for 90% of consumer deposits, giving it a reliable, recurring revenue stream from a constituency on its way to affluence.
The loan segment performed better than expected in 2024, with revenue up 18% year over year in the fourth quarter and a 9% increase in contribution profit. Lower interest rates, presuming the Federal Reserve cuts benchmark rates further this year and market rates also decline, should have a positive impact here. But SoFi has become much more than a lender, offering a full assortment of consumer financial services that are ripe for cross-selling, and that help keep members engaged with the app.
The company's major growth is happening in its financial services segment, which includes all non-loan products outside of the tech platform business-to-business segment. Revenue increased 88% in 2024, and contribution profit swung from a $262 million loss to a $307 million profit. Net interest income was up 47%, driven by consumer deposits, and increasing deposits were driving leverage in the loan segment, too. The tech platform segment has been less exciting, but it's also growing, with revenue up 12% and contribution profit up 34%.
SoFi stock is 54% below its all-time high and trades at a one-year forward P/E ratio of 25, so investors can add this top growth stock to their portfolios at a great price right now.
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Jennifer Saibil has positions in Nu Holdings and SoFi Technologies. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
