We recently published a list of 10 Most Buzzing Stocks To Buy Now. In this article, we are going to take a look at where Nu Holdings Ltd. (NYSE:NU) stands against the other buzzing stocks.
Stock Market Volatility
September and October tend to be the most volatile months for the stock market, particularly during election years. This was recently discussed by Sam Stovall, the chief investment strategist at CFRA Research, who expects the volatility to stay until the end of October.
Stovall says that while the S&P 500 recovered all its 2022 bear market losses by January this year, and reached 22 new all-time highs by March, equities have digested some of these gains and experienced sector rotation away from 2023 high flyers into more defensive areas of the market. Hence, the year started great, but the markets are declining once again. The S&P 500’s average volatility in October 2023 was 35% higher than the average for the remaining 11 months of the year.
Investors are concerned that the Fed will be slower to lower interest rates while inflation remains sticky and GDP growth begins to cool. Stovall expects three 25-basis point cuts this year, followed by another four in 2025. He thinks that while a 50 basis point cut is rare since it only ever happened twice, in 2001 and then 2007, it is still not unlikely given that the economy is worse than expected.
According to Stovall, investors need to be prepared for this increased volatility as the market digests the Fed’s actions and the potential impact on the economy. The market will likely remain uncertain until the Fed can find the right balance between slowing down the economy and stopping inflation, without causing a recession.
Tom Lee, Fundstrat Global Advisors managing partner and head of research, is of a similar idea, suggesting that investors should remain cautious over the next 8 weeks, due to both uncertainty surrounding elections and the September cuts. He says that the stock market may experience a 7-10% pullback, considering there have already been two 7% corrections this year.
Lee thinks at least a 5% pullback can be anticipated, but if it’s only 1-2%, then that’s negligible. But despite the recommended caution for the 8 weeks starting September, he thinks the volatility does not translate into a tough full-year. He views this pullback as a buying opportunity, believing that the market has not yet reached its peak for 2024.
As Lee encourages investors to be ready to buy the dip, we are here with a list of the most buzzing stocks to buy now.
Note: All price/volume data is as of September 6.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide angle shot of a team of bankers and financial advisors evaluating an investment portfolio on a touchscreen monitor.
Nu Holdings Ltd. (NYSE:NU)
Volume: 48.735 million
Average Volume (3-Month): 41.735 million
Number of Hedge Fund Holders: 59
Nu Holdings Ltd. (NYSE:NU) is a Brazilian digital bank and fintech company that provides financial services to the underserved and unbanked population in Brazil and other Latin American countries. The product offerings are across spending, saving, investing, borrowing, and protecting.
During the second quarter of 2024, the company’s customer base grew strongly, with 5.2 million new customers joining the platform, taking the total customer count to 104.5 million, a 25% increase year-over-year. The active base increased by 27%. There are established primary banking relationships with about 60% of this active customer base
Brazil added an average of 1.2 million new customers monthly bringing the total to 95.5 million at the end of Q2. Mexico experienced strong growth with 1.2 million net ads in the quarter resulting in 7.8 million customers. Colombia surpassed the 1 million customer mark with almost 1.3 million customers following the successful launch of the Cuenta product.
All of this resulted in a revenue of $2.85 billion, recording a 52.45% year-over-year rise. Revenue from credit cards increased by 39% year-over-year, reaching a total of $14.3 billion. The lending portfolio expanded by 92% year-over-year, reaching a total of $4.6 billion.
Interest-earning installments now represent 28% of the credit card portfolio, up from 26% last quarter. PIX and Boleto financing products drove this growth. These products offer attractive returns and meet customer needs.
With 59 hedge funds long in the company, it is evident that the company is expected to be well-positioned for growth. The largest stake amounts to $257,140,883 by Atmos Capital.
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.”
Overall NU ranks 10th on our list the most buzzing stocks to buy. While we acknowledge the growth potential of NU as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
