When it comes to finding growth, investors tend to gravitate to known growth names like Nvidia or Tesla. One can understand that inclination given the news coverage on these companies and the ability to see their products first-hand.

However, that may mean investors ignore growth stocks if they emerge in other parts of the world. This may be the case with Nu Holdings (NU 1.66%), since it operates exclusively in Brazil, Mexico, and Colombia. Still, with the transformation the company's NuBank operating business has brought to the banking sector in those countries, this fintech stock is likely an excellent place to invest $1,000.

Why Nu?

To understand why Nu is potentially transformational, one needs to understand the nature of finance in Latin America. Many consumers in the region only use cash. In the past, a small number of banks dominated the sector, leaving hundreds of millions of people with neither bank accounts nor credit cards.

NuBank started in Brazil and has emerged as the world's largest digital bank. As a digital bank, it does not have to spend capital maintaining branch locations. Also, since vast numbers of Latin Americans own a smartphone, most banking can occur online.

Using this approach, NuBank has grown to 89 million customers, 19 million of whom opened an account within the past year. The total also includes some of the previously unbanked. Nearly 6 million Brazilians received their first credit card in a one-year period in 2021 and 2022.

NuBank is so successful in Brazil that 84 million people, or 51% of the adult population, hold at least one NuBank account. With the bank approaching saturation in that country, NuBank has begun to expand in Mexico and Colombia.

Nu's financials

Those moves should allow Nu to maintain rapid growth. In the first nine months of 2023, revenue rose 68% to $5.6 billion from the year-earlier period. With operating expenses rising only 17% during that time, Nu reported net income of $670 million, reversing a net loss of $67 million a year earlier.

Admittedly, analysts predict a slower 35% revenue growth rate in 2024. Nonetheless, that should keep profit increasing at a rapid clip as Nu expands in Mexico and Colombia.

Furthermore, Warren Buffett's team at Berkshire Hathaway bought shares around the time of Nu's initial public offering (IPO) in late 2021, just before the 2022 bear market. Thanks to the hangover from the 2022 slump, investors can buy below the original IPO price of less than $9 per share and at a level close to what Buffett's team paid. As of the time of this writing, $1,000 will buy about 120 shares.

With the recovery, Nu Holdings has risen by more than 105% in 2023, though the stock appears to still trade at a reasonable price. Despite being newly profitable, Nu sells at a forward price-to-earnings (P/E) ratio of 34. Considering an estimated 67% increase in profit for 2024, that valuation indicates it is not too late to follow Buffett's lead and add shares.

Consider Nu stock

Nu's growth rate and valuation make it an excellent stock in which to invest $1,000. Indeed, Nu's growth is not well-known to most American investors. Even though it is one of the stocks Warren Buffett owns in his Berkshire Hathaway portfolio, its low valuation indicates that this stock is largely overlooked, even by committed fintech investors.

However, that does not change the fact that it has transformed banking in Brazil, and with the similar financial cultures in Mexico and Colombia, it could easily repeat that success in those two more countries. That factor alone should translate into significant share price appreciation during the next few years.