We recently compiled a list of the 10 Stocks That Will Make You Rich In 2025. In this article, we are going to take a look at where Nu Holdings Ltd. (NYSE:NU) stands against the other stocks that will make you rich in 2025.

What to Expect from the Stock Market in 2025

Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company, recently shared his outlook for the stock market in 2025. His analysis reflects cautious optimism, emphasizing potential growth and significant risks. Timmer described 2024 as a “Goldilocks” year for U.S. stock returns, characterized by robust earnings growth and rising valuations. The S&P 500 Index experienced a substantial increase, concluding the year with a gain of approximately 28% as it reached new all-time highs. This performance was driven by strong earnings from major companies, particularly the so-called “Magnificent Seven” stocks whose growth has significantly influenced the overall market dynamics.

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Looking ahead to 2025, Timmer maintained a bullish stance on stocks but cautioned that investors should not expect returns to match the spectacular gains of the previous two years. He noted that while earnings forecasts remain strong, especially for the mega-cap stocks, valuations are stretched, currently sitting in the 90th percentile historically. This suggests that significant further expansion in price-to-earnings (PE) ratios could lead to a bubble scenario, which he believes is unlikely. He expects continued earnings growth to support stock prices in 2025. However, valuations may limit future growth. Timmer suggests that earnings must drive performance rather than further valuation expansion to avoid a bubble scenario.

With the bull market entering its third year, Timmer describes it as being in “later innings,” indicating increased caution regarding future performance. He also suggested several risks that could potentially impact the market in 2025. For instance, heavy reliance on a few mega-cap stocks poses a risk; if these stocks falter, it could drag down overall market performance despite broader participation from other stocks. Secondly, although he does not foresee a return to the high inflation rates of the past decades, he warns that rising inflation could lead to higher interest rates, which would negatively affect the stock market.

Our Methodology

To compile the list of 10 stocks that will make you rich in 2025, we conducted a consensus. We sifted through various internet rankings to get an initial list of stocks expected to explode in 2025. Next, we sourced analyst sentiment for each stock from CNN and ranked our list in ascending order of the analysts’ projected upside potential for the next twelve months. Please note that the data was recorded on Friday, December 20, 2024.

Why do we care about what hedge funds do? 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).

Nu Holdings Ltd. (NYSE:NU)

Analysts Upside Potential: 49.33%

Nu Holdings Ltd. (NYSE:NU) is a Brazilian company that operates primarily as a digital bank through its platform, Nubank. The company provides various financial services including credit and debit cards, interest earnings accounts, investment products, loans, and insurance options. It has two strategic moats over its competitors. The first is its entirely online operations which helps keep costs low and allows it to offer services at reduced fees compared to traditional banks. The second edge is its special focus on Latin America which has limited access to banking services.

Nu Holdings Ltd. (NYSE:NU) has been focused on three main principles namely customer growth, increasing revenue per customer, and efficient operating costs. During the fiscal third quarter of 2024, the company achieved a total of 110 million customers globally, marking a 56% increase from 70 million two years ago. This growth is primarily driven by strong additions in Brazil, where they added an average of 1.1 million new customers each month, reaching nearly 99 million customers. Moreover, the company also added 1.2 million customers in Mexico, bringing the total to 8.9 million.

Financially speaking the bank generated revenues of $2.9 billion, reflecting a 56% year-over-year increase. This growth was fueled by successful cross-selling and up-selling strategies, as well as new product introductions. Some of its recent new product launches include NuCel, a mobile phone service in Brazil, aimed at simplifying telecommunications for customers. It is also developing a marketplace platform that allows customers to access various products and services directly through its app and is venturing into the travel sector.

Here’s what Baron FinTech Fund stated 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 5th on our list of the stocks that will make you rich in 2025. While we acknowledge the potential of NU as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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.

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Disclosure: None. This article is originally published at Insider Monkey.