1 Cathie Wood and Warren Buffett Inventory that might well Trudge Parabolic in 2025

Two investors who, perhaps coincidentally, could not be more opposite now are Cathie Wood and Warren Buffett. Wood is the CEO and Chief Funding Officer of Ark Make investments, an organization that specializes in investing in growing topics like synthetic intelligence (AI) or genomics. Buffett spent most of his tenure at Berkshire Hathaway preference for owning blue-chip stocks over volatile alternatives in higher-risk emerging sectors.

But despite their different philosophies, Wood and Buffett have some overlap between their portfolios. It’s called the one company everyone likes from Ark and Berkshire Well Holdings (NYSE: NU). Nu is a fintech player that specializes in Latin and Southern US.

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Let’s delve into why Nu seems to shine in particular from a valuation perspective, and make the case for why 2025 is also a landmark twelve months for this under-the-radar trading alternative.

Nu’s working efficiency is stable

Nu is a digital money services and products platform that offers its users an inclusive array of products ranging from checking and financial savings accounts, investments, loans and more. For much of its history, Nu focused on markets like Brazil, Colombia and Mexico.

Still, the company announced in December that it was participating in a funding round for digital banking platform Tyme Community — which boasts 15 million customers across South Africa and the Philippines.

At the end of the third quarter (which ended September 30), Nu had 110 million participants on its platform, representing a 23% year-on-year increase. In addition, the company’s reasonable earnings per user (ARPU) gradually increased to $11 per member.

Nu was willing to increase its margins and develop profitability by making its customers more profitable over time. It’s true that in the third quarter, Nu’s worse margin increased by 300 basis points, and profit increased by 83% to $553 million in the twelve months.

Image credit: Getty Photos.

The valuation in relation to the company’s question is persuasive

According to the chart below, Nu trades right in the heart during this look at various global fintech operations based entirely on price-to-gross sales (P/S) ratios.

NU PS YCharts Ratio Information

While this may or may not additionally mean that Nu is valued attractive to this cohort, the underlying pattern within the company’s P/S stands out to me. Nu’s P/S has been gradually declining over the past few months. I convey a well-known reason without haste, this revolves around the macroeconomic conditions for the length of the Latin USA, especially in Brazil.

While such concerns are valid, I now feel that I don’t see this dynamic as a reason to sell the stock.

Nu strikes a chord in my memory of SoFi

One stock that has had a rough ride over the past few years is SoFi. SoFi is primarily an identical exchange to Nu, offering many of the same basic money services and products, with some level of mobile app comfort.

Although SoFi favors a variety of products, the company’s biggest earnings per mile come from lending. As the US has faced abnormally high inflation ranges over the past few years, the Federal Reserve has resorted to aggressive moves in monetary protection – raising borrowing costs on 11 occasions between 2022 and 2023. These strikes had a critical impact on SoFi lending and for an extended period as investors fled the stock.

Nevertheless, the image of the industry gradually began to strengthen, and in the last months of the last twelve months the Fed began to cut interest rates aggressively. Unsurprisingly, SoFi began to witness a rapid jump in its loan exchange and excitement at a certain level of the stock began to grow. SoFi’s own shares surged more than 80% on the back of the first charge as part of the cut in mid-September.

SOFI information at YCharts

Considerations of inflation and its issue on the SoFi stock market immediately reveal parallel problems with those of Nu, given the company’s publicity and vulnerability to the provocative economic climate in Brazil. But with that said, investors should take a slightly smaller view and be aware that economic provisions are finally opening up for a shift and improve the collapse.

For me, the concerns regarding the issue of the end of the Nu term are justified. However, the commodity’s long-term picture looks incredibly solid – highlighted by rising users of scandal-promoting harmful alternatives, rising profits and economic expansion.

I see Nu following the same path as SoFi, and I submit that the stock is favorable for investors with a long-term mindset.

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Adam Spatacco holds positions at SoFi Technologies. The Motley Fool has positions and recommends Adyen, Berkshire Hathaway and StoneCo. The Motley Fool recommends Nu Holdings and PagSeguro Digital. The Motley Fool has disclosure protections.

The views and opinions expressed herein are those of the author and do not primarily reflect those of Nasdaq, Inc.