Up 33% in 2025, this high Warren Buffett progress inventory might head even increased! 

It’s not typically that hyper-growth shares are talked about in the identical breath as Warren Buffett. The funding portfolio of his holding firm, Berkshire Hathaway, tends to primarily purchase mature blue-chips.

So it’s protected to say that Nu Holdings (NYSE: NU) is a little bit of an outlier in Berkshire’s portfolio. The agency is a fast-growing digital disruptor shaking up the standard banking system throughout Latin America.

Admittedly, this can be a small holding and we will’t make sure that Buffett purchased it himself. Extra seemingly, it was one among his two investing lieutenants, Todd Combs and Ted Weschler, who took a stake within the Brazilian neobank again in 2021.

However, the inventory has been on fireplace, rising 33% in 2025 and over 200% because the begin of 2023. But I feel it has much more progress within the tank and is subsequently price contemplating. Right here’s why.

The rise of digital banking throughout Latin America

Nubank, because it’s recognized, is the biggest digital financial institution in Latin America and one of many fastest-growing on-line platforms on this planet. Its purple bank cards are ubiquitous in its native Brazil, the place it has over 100m clients (greater than half of the grownup inhabitants).

Why are so many purchasers flocking to the agency? Nicely, the area’s conventional banks are infamous for his or her outrageous charges and horrible customer support. Even as we speak, they typically cost charges for practically each transaction, together with ATM withdrawals, on-line transfers, and even account inquiries.

This has created alternatives for fintech corporations like Nubank, which provide easy-to-use on-line banking options with far decrease charges and vastly superior customer support. 

Certainly, founder and CEO David Vélez has stated that the corporate selected to make its debit and bank cards purple as a result of it wished to be “essentially the most anti-bank attainable.” 

Whereas the agency’s providing providers to lower-income populations in Brazil, Mexico and Colombia, it’s more and more attracting higher-income clients from legacy banks.

Development machine

Income progress’s been nothing in need of mind-blowing, rising from $612m in 2019 to an anticipated $11.8bn final yr.

However that is no cash-incinerating start-up. Nu’s common income per lively buyer has grown from $3.50 at first of 2021 to $11 by the top of September final yr. And web revenue is anticipated to have surged 84% to $2.2bn in 2024.

Trying forward, income is forecast to motor previous $20bn by 2027, with earnings rising by a mean of 48% in that point.

Engaging valuation

However how a lot to pay to take a position on this high-growth inventory? Not as a lot as may be suspected, with the inventory sporting a price/earnings-to-growth (PEG) ratio of 0.7.

For context, a PEG ratio under one suggests {that a} inventory may be undervalued relative to its earnings progress potential. I strongly imagine that to be the case right here, which is why I’m seeking to purchase extra shares.

That stated, I’ll be maintaining a tally of Nu’s rising non-performing loans. In Q3, 90+ day delinquencies rose to 7.2% from 6.1% the yr earlier than, a pattern that will result in extra mortgage loss provisions and decrease earnings.

Long term although, I’m very bullish right here. Nu’s quickly increasing digital ecosystem ought to lead to profitable cross-selling alternatives, whereas additional enlargement throughout Latin America and past seems to be very seemingly.