The U.S. is the world's largest economy. So, it makes sense that investors searching for lucrative opportunities would focus on this country. However, there are also some wonderful businesses with a presence in other parts of the world.
Nu Holdings (NU 0.48%) is one of them. It's a financial services innovator that has reached a market cap of $84 billion (as of Dec. 5). Investors should be paying attention, as this business might make for an attractive portfolio candidate.
Should you buy this surging fintech stock while it's trading below $20? Here are the factors that investors should be thinking about.
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Nu's financial performance continues to be impressive
When viewing Nu Holdings from a fundamental perspective, it's hard not to come away impressed. The company has become a dominant banking platform in Latin America, as the management team identified a massive opportunity to serve the population in this region that might have had limited access to financial services. Nu rode the wave of greater internet and smartphone penetration as well, leaning on a fully digital model to achieve rapid growth.
Nu has a strong presence in Brazil, its most critical market, where it counts 110 million customers (60% of the adult population in the nation). Mexico and Colombia, its two other markets, have serious growth potential, although they have smaller populations than Brazil. The company has 127 million customers in total, a number that has climbed 165% in the past four years, showcasing incredible adoption of Nu's various offerings.
From a competitive standpoint, Nu is in a good place. And this is directly benefiting the financials. Growth has been superb. More customers, unsurprisingly, lead to greater revenue. Nu collected $4.2 billion in sales in Q3 (ended Sept. 30), up 45% year over year. Over time, customers find themselves using more products and services, as cross-selling opportunities help to create switching costs.
Nu is growing rapidly, but it's also extremely profitable. It reported just under $2 billion in net income through the first nine months of 2025, 39% higher than in the same period last year. The consensus view among Wall Street sell-side analysts is that the company's earnings per share in 2027 will be 177% more than what it registered in 2024. This would be a fantastic outcome.
It helps that the business possesses superior unit economics. Nu's average revenue per active customer in Q3 of $13.40 was significantly higher than the $0.90 it costs to serve them (figures on a monthly basis). These are two important metrics investors should watch going forward.
NYSE: NU
Key Data Points
Nu's valuation isn't as cheap as it once was
A thorough analysis of a potential investment opportunity isn't complete without also considering valuation. From a fundamental viewpoint, Nu looks to be in top shape. However, it's clear that the valuation isn't as compelling as it once was.
Investors who want to buy the stock today must be comfortable paying a price-to-earnings (P/E) ratio of 33.2. This represents a 29% premium to the P/E multiple of 25.7 that Nu traded for at the start of 2025. Despite the stock experiencing periods of extreme volatility, the share price has soared 66% this year. With the stock at record levels, the market keeps viewing the business in a favorable light.
Investors who care more about valuation might view this opportunity as being too risky. Expectations are high that the company will continue to perform well and post strong revenue and earnings growth. If Nu, for whatever reason, misses Wall Street expectations, the stock could fall.
On the other hand, there are investors out there who prioritize owning the best businesses that they can find, especially those that are putting up impressive growth numbers. For these risk-tolerant market participants, buying Nu shares right now while they're under $20 could be a no-brainer move.
