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 1.05%) 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.
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.
