1. Nu Holdings
U.S.-based investors are unlikely to be familiar with Nu Holdings. The Sao Paulo-based fintech financial services platform serves customers in Brazil, Colombia, and Mexico. This is notable because Latin America's fintech sector differs significantly from those in more developed parts of the world. In Nu's chief markets, large percentages of the population have neither bank accounts nor credit cards.
NYSE: NU
Part of Nu's competitive advantage is that it maintains less of a physical footprint than traditional banks do, and it passes on the cost savings from that model to its customers by keeping its fees low. With this approach, Nu has extended services to more than 60 million customers, almost 6 million of whom joined in the first quarter of 2022 alone.
Nu generated $877 million in revenue in Q1, up 258% from year-ago levels. However, the total cost of the financial and transactional services it provided rose by over 350% during that time. Even with slower growth in operating expenses, the company lost $45 million during the quarter, only slightly less than its $49 million loss from a year earlier.
Analysts expect its revenue growth to slow to 121% for the year. Nonetheless, the stock has declined by more than 70% from its 52-week high. With its price-to-sales ratio down to 12, the stock has begun to appear more reasonably valued. As Nu expands the availability of financial services to people in its heavily unbanked markets, it could turn profitable, benefiting both Buffett and the investors who join him in taking a chance on this stock.