Berkshire Hathaway (BRK.A -0.28%) (BRK.B -0.68%), the holding company led by investing legend Warren Buffett, not only outdid the market's poor performance in 2022, it also posted a gain (although a modest one).
Buffett is known for his value-driven investing approach, which -- as he has demonstrated yet again -- often trumps growth investing. One excellent illustration of this is American Express (AXP 0.07%).
But that doesn't mean there are no growth stocks in the Berkshire portfolio. Nu Holdings (NU -1.37%) is a high-growth stock that recently made it onto my buy list after its price fell and its valuation became more reasonable. Both of these are outstanding buys right now.
1. American Express: Younger shoppers drive growth
Over the past few years, American Express has reinvented itself as a with-it, millennial-targeting financial company -- almost the hot accessory for the younger, affluent set. This has been a transformation from its branding as the credit card of choice for an older, upscale crowd. The refresh feels current, yet it easily fits into the company's model of offering customer-focused service and perks.
The new generation of cardmembers is eagerly adopting American Express' card and using its benefits, driving growth even in the volatile economy. New cardmembers hit a record in 2022 at 12.5 million, and 70% of new cards were fee-based. Millennials and Gen Z customers accounted for 60% of new card acquisitions, the largest age cohort, and are responsible for the highest billed volume.
Chief Executive Officer Stephen Squeri said that American Express's model, which the company has fine-tuned over decades of service, is difficult for anyone to copy. It has carved out its niche through strong brand differentiation, reorienting its membership make up, a global premium customer base, and a payments system that runs smoothly.
Revenue increased 25% in 2022 from the year before, and earnings per share (EPS) was $9.85, both surpassing company projections. Management provided an upbeat forecast for 2023 -- 16% sales growth and $11.20 in EPS.
American Express is well positioned to grow in 2023, and its stock is already up 18% this year after declining 10% last year. Catch this stock on the way back up.
2. Nu Holdings: Early-stage growth opportunity
Nu has been public for just over one year, and its stock has declined 54% in that time. However, it has posted incredible growth and two consecutive quarters of profitability as well.
Nu operates Nubank, a digital bank serving Brazil, Mexico, and Colombia. It has rapidly grown from its humble origins as a start-up fintech in 2013 to one of the largest digital banks in the world, with 74.6 million customers, including 44% of the market in Brazil.
Its goals are to offer customer-focused, easily accessible, and affordable financial solutions in a digital framework, and its growth strategy involves attracting new customers as well as upselling and cross-selling new products. Its services cover personal banking, credit cards, investing, insurance, and business solutions.
In the 2022 fourth quarter, revenue increased 112% year over year, and Nu posted $58 million in net income. The vast majority of its business is still in its home market of Brazil, which accounts for nearly 71 million of its customers and $1.35 billion of its $1.5 billion in revenue. Brazil is still a growth market, but Mexico and Colombia, where its presence is still small, offer enormous opportunities.
Image source: Nu Holdings.
Nu stock is also up 17% so far this year, and it's trading at a price-to-sales ratio of 7.9, which is much lower than its high of almost 60. That's not exactly cheap, but in the context of its incredible opportunities and performance, Nu stock looks like a good value even at this price.
