The chances are that anyone who bought Amazon in its early years, even a few shares, is probably rich today. Life-changing stocks are rare, but they do come along now and then. Amazon has been immensely successful because of its DNA, its culture of aggressive expansion into large addressable markets, and a customer-first attitude that borders on obsession.
There may never be another Amazon, but Nu Holdings(NYSE: NU) might remind you of the U.S. e-commerce giant. The Brazil-based digital bank has become a juggernaut and is beginning to innovate and expand into exciting new areas. However, based on the stock's recent 30% decline from its highs, you wouldn't know it.
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Can buying Nu today set you up for life? I peeked under the hood to find out.
A dominant core business with impressive growth potential
Nu is a digital bank that provides financial products and services to customers in Brazil, Mexico, and Colombia. Banking is a tremendous opportunity in Latin America, where many still lack basic banking services, let alone credit and investment products.
Nu dominates its home market, Brazil, where it estimates it serves 58% of adults. It later expanded into Mexico and Colombia, ending 2024 with 114.2 million total customers.
Its customer base grew 22% last year, surpassing 100 million in Brazil and 10 million in Mexico. In 2024, it nearly doubled its customers in Mexico, a sign that Nu is replicating its success in new countries. The company's not done growing in these three countries and could still expand throughout Latin America, which has more than 660 million people.
Nu's customers also use more products and services as their incomes grow with age and economic development. Acquiring many new customers while existing customers bank more has fueled explosive revenue growth. Nu's total revenue has grown from $1.7 billion in 2021 to $11.5 billion last year. The company could have a very high long-term ceiling if this momentum continues.
Nu is taking some pages out of Amazon's playbook
Look closely; you might see some of Amazon's personality in Nu.
Nu emphasizes the customer experience. On its Q4 earnings call, management reported that the company achieved a Net Promoter Score (measuring how likely customers are to recommend a business) of 84 among high-income customers, arguably the most important customer segment for a bank operating in emerging markets.
In Amazon fashion, Nu is leveraging its core strengths to go after new opportunities. It is integrating access to new services into its financial app, including:
Nu Marketplace: E-commerce
Nu Travel: Travel planning
NuCel: Mobile phone service
NuPay: Digital payments
Due to its digital footprint, Nu's customer base is younger, so it seems wise to recognize that and test new ideas. Management can keep and expand what works. While most of this is in the early stages within Nu's core Brazilian market and doesn't contribute much financially, it could become another growth engine during the next five to 10 years.
Nu is profitable, and the price is right
Countless growth stocks tell a good story, but don't make a penny of profit. That's not the case here. Nu's diluted earnings per share were $0.40 last year, and analysts estimate they will rise to $0.78 in 2026. Again, this is a rapidly growing company with a long runway ahead.
It's not all roses; there are risks. Remember that Nu is a bank. A recession could slow growth, spike loan defaults, and cause financial losses. But if you look at how earnings are growing with Nu's revenue, it's reasonable to expect the company to make much more money a decade from now, assuming the business stays on the right track.
From a valuation standpoint, the stock's recent decline looks like a gift to long-term investors. Nu Holdings trades for about 27 times last year's earnings, a bargain for a company that could double its profit during the next two years.
Can the stock set you up for life?
So can buying the stock set you up for life, like Amazon has done for previous generations of investors?
It might be tough to replicate Amazon's staggering returns, since Nu Holdings already has a $50 billion market cap. Nu would need to grow to become a $750 billion to $1 trillion stock, and that's still an extremely rare feat.
That said, the stock's cheap valuation, high-octane growth, and innovative DNA could produce market-beating investment returns well into the future. A few winners like that in a diversified portfolio can do wonders for your financial future.
Should you invest $1,000 in Nu Holdings right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
