2 Reasons to Buy Nu Holdings Stock Like There's No Tomorrow

If you're tired of sifting through slow-growing stateside fintech stocks, you may want to try Nu Holdings (NYSE: NU) on for size. The paren't company behind Brazil's Nubank has been turning heads since launching a decade ago and going public three years ago.

There are some legitimate valuation and geopolitical concerns, but can the risks be worth the potential market-thumping return? Let's head south, exploring two reasons why you might want to consider buying Nu like there's no tomorrow.

1. Growth is always a good look

Nu has gone a long way in a short amount of time. It officially launched in Brazil in 2014, introducing a credit card catering to the country's massive unbanked population. It has caught on even with the banked. A whopping 56% of the country's adult population now has a Nubank credit card, and the plastic isn't just getting buried in wallets and purses. Monthly activity rate is up to a record 84% of its user base.

This is no longer just a Brazilian growth story. Nu introduced its digital branchless bank in Mexico and Colombia a couple of years ago. Its customer base has expanded by 23% to 109.7 million over the past year. The business itself is growing even faster. Revenue soared 58% on a foreign-exchange basis or 38% in the more relevant U.S. dollars for stateside investors to $2.9 billion in its latest quarter. The bottom line is growing even faster. Adjusted earnings shot 67% higher to $592 million in the third quarter it reported earlier this month.

Revenue growth is a given for a company early in the disruption process. It's the earnings story that is more remarkable. Nu turned profitable nearly two years ago, and it's been expanding on that ever since. It's been able to widen its margins despite rolling out new products and investing in nascent territories. Nu is trading for 32 times this year's projected earnings and 22 times next year's target. It's a steep multiple for financial services, but Nu's stellar growth and long runway make it a compelling nibble for risk-averse investors.

Image source: Getty Images.

2. Opportunity is knocking on a recent pullback

Nu hit an all-time high on Nov. 12. Two days later it would take a small step back after posting seemingly strong results. A day later it would stumble on news that Warren Buffett's Berkshire Hathaway had sold part of its position in Nu for the first time in more than three years of ownership.

The shares are starting to bounce back, but they still enter this trading week 14% below this month's all-time high. The report was a beat on both ends of the income statement. Buffett shedding 20% of his stake in Nu -- a stock that has more than tripled since the start of last year -- isn't shocking or problematic. The value of his Nu position is a lot more than it was just a few months ago despite the correction and the partial sale.

Nu has been a monster stock in the last two years, but growth stocks never go up in a straight line. The bus doesn't leave the station. Sometimes it shifts into reverse before stepping on the gas again. This could be that pullback that you were waiting for.

The runway is still long for Nu. It's not about the 44% of Brazil that hasn't opened a Nubank account yet. It's about the rest of Latin America beyond just Mexico and Colombia. It's about making the most of its mainstream appeal to continue rolling out new offerings. The Nu story is just a decade in the telling. Get comfortable, because the tale is just getting started.

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Rick Munarriz has positions in Nu Holdings. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.