The S&P 500 Financials index has risen roughly 12% year to date, but its gains have underperformed the 13% or so increase for the benchmark S&P 500 index across the year. Meanwhile, Nu Holdings (NU +2.34%) stock has managed to soar far higher than either index -- up 56% -- across this year's trading.
Despite the fact that Nu stock has substantially outperformed the broader market and financials space, there are good reasons to think that shares of the Brazil-based digital bank remain one of the best buys in the sector. Here's why.
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Nu Holdings still has what it takes to be a big winner
In the second quarter, Nu Holdings posted year-over-year sales growth of 42% on a currency-adjusted basis. The business added 4.1 million new customers in the period -- good enough to deliver year-over-year growth of 17%. Nu continues to solidify its position as a leading fintech services provider in Brazil and other Latin American markets, and it closed out last quarter with 122.7 million users across its platform.
NYSE: NU
Key Data Points
Nu has an impressive user base, and it continues to grow engagement at an impressive pace. With a gross margin of 42.2%, Nu still has plenty of room for margin expansion going forward. In between a strong sales growth outlook and the potential for substantial profit-margin improvements, Nu Holdings is a stock that looks poised to significantly outperform the financials sector.
