10 Stocks Jim Cramer Thinks You Should Check Out

3. Nu Holdings Ltd. (NYSE:NU)

Number of Hedge Fund Investors: 59

Jim Cramer notes that while he appreciates the digital banking sector, he is cautious about investing in a stock that, despite being modestly profitable, has already surged by 72%. He advises waiting for Nu Holdings Ltd. (NYSE:NU) to stabilize before buying, especially given the current market uncertainty. Cramer suggests that it’s better not to rush into a purchase at this time.

“When I see this, I think of digital banking, which I like. But despite being modestly profitable, the stock’s been rewarded with a 72% increase. I’d rather wait for this stock to cool off. We have an uncertain market, so let’s not jump to the conclusion that we need to buy it right now.”

Nu Holdings Ltd. (NYSE:NU) is a strong investment opportunity due to its impressive growth and market position in Latin America’s digital financial sector. Nu Holdings Ltd. (NYSE:NU) has amassed over 85 million users by Q2 2024, demonstrating its success in reaching a market that is often underserved by traditional banks. In its Q2 2024 earnings report, Nu Holdings Ltd. (NYSE:NU) reported an EPS of $0.12, surpassing analyst expectations, although its revenue slightly missed forecasts at $2.85 billion.

Despite this minor shortfall, Nu Holdings Ltd. (NYSE:NU)’s revenue grew by 52% year-over-year, indicating robust growth driven by its operational efficiency and improved profit margins. Nu Holdings Ltd. (NYSE:NU)’s expansion into credit and insurance services diversifies its revenue streams and aligns with the increasing demand for fintech solutions in the region. Analysts predict that EPS will rise to $0.40 in 2024 and $0.62 in 2025, suggesting that Nu Holdings Ltd. (NYSE:NU) is on track for continued growth and long-term success.

Baron FinTech Fund stated the following regarding Nu Holdings Ltd. (NYSE:NU) in its first quarter 2024 investor letter:

“Nu Holdings Ltd. (NYSE:NU) is a digital bank with operations in Brazil, Mexico, and Colombia. Shares appreciated during the quarter after the company reported strong balance sheet growth and improving margins. New product launches and expansion in newer countries are yielding favorable results. Nu also benefited from inclusion in the MSCI Brazil Index, which prompted buying from passively managed funds. We continue to own the stock because Nu is disrupting the financial services industry in Latin America with its digital distribution and intense focus on user experience. The company has grown to serve over 90 million customers in less than 10 years, largely through word-of-mouth referrals. We believe the company’s superior product offering will drive continued share gains in large and growing markets.”