Fintech stocks run the gamut from banks that lean into new innovations to technology companies offering financial services. Because the companies can vary widely, it can be difficult to decipher which fintech stocks are the best to buy.
If you've got $1,000 to invest right now and are trying to find one of the best fintech stocks available, there are a few good reasons to consider Nu Holdings (NYSE: NU). Here's what you should know.
A fast-growing fintech
Nu Holdings is the parent company of Brazil-based Nubank and offers customers a wide variety of services, including credit cards, checking and savings accounts, investing, crypto, personal loans, and, most recently, cellphone plans.
That's quite a list of services, and one of the company's strengths has been providing tons of financial solutions to as many customers as it can across Brazil, Colombia, and Mexico. Just a decade after it first launched in Brazil, Nu had nearly 110 million customers at the end of the third quarter (which ended Sept. 30), which was 23% higher than the year-ago quarter.
That sounds impressive enough on its own, but it's also worth noting that Nu has the largest number of active credit customers in all of Brazil. More than half of adults in the county have a Nubank account, and the percentage of monthly active customers reached 84% in the third quarter.
Nu's expanded its services into other countries over the past few years and now has 9 million customers in Mexico and 2 million in Colombia. While a modest amount compared to Brazil, customer growth accelerated by nearly 16% in the third quarter, and Nu is already Mexico's leading digital financial platform.
It's profitable and continually building on that foundation
Some fintech stocks are high-growth companies but fall short in the profitability department. Not Nu Holdings. The company turned a net profit in 2021 and continues to expand its margins.
Image source: Getty Images.
Management said in a third-quarter press release that Nu has kept the cost of serving its customers low while receiving a high return on its equity when acquiring new customers, resulting in rising net income.
Revenue rose 58% in the third quarter to $2.9 billion, and Nu's net income jumped 82% to $553 million. That impressive growth was helped by the company's expanding gross profit margins, which increased to 46%, up from 43% in the year-ago quarter.
With its strong customer growth, expansion into additional countries, and increasing bottom line, Nu looks like a good place to put $1,000 over the long term. The company's stock has a price-to-earnings ratio of 33 right now, which isn't exactly inexpensive. But compared to the S&P 500's P/E ratio of 30.9 and fellow fintech SoFi Technologies' earnings multiple of 133, Nu's stock looks well priced.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
