However, with fears about a UK recession rising, I think this pair of bank stocks is worth looking at before Lloyds in May.

Caucasus region

Georgian lender Lion Finance (LSE:BGEO) only joined the FTSE 100 last month, but it’s already up 16% since then. This puts the five-year return at a breathtaking 904%, with loads of dividends on top.

Despite this, the lender (formerly Bank of Georgia) is trading at just 6.6 times forward earnings. And there’s a 3.5% forecast dividend yield.

Just writing all this makes me regret selling this stock in 2024. But the reasons I did so — political risk from contested elections and sanctions from the EU and US — haven’t gone away. These could still cause problems for the bank and its share price.

However, economic growth in Georgia is still expected to be around 5% in 2026, driven by high consumption, robust tourism, and credit growth. And Lion Finance, which is part of a banking duopoly in the country, continues to grow profits strongly.

The lender also owns Ameriabank, one of Armenia’s largest banks. This is another strong economy, with GDP growth of about 7.2% in 2025.

Still trading cheaply and now in the bright lights of the FTSE 100, the stock’s run could be set to continue.

Latin America

Turning to Latin America now, we have Nu Holdings (NYSE:NU). This is the region’s largest digital bank, with an astonishing 131m customers in three countries (Brazil, Mexico, and Colombia) at the end of 2025.

Since Nu is a digital bank with no physical branches, it doesn’t have to rent more buildings and hire branch managers to serve extra customers. As such, the asset-light company is growing revenue and profits very quickly.

One impressive metric worth highlighting is that Nu’s monthly average revenue per active customer reached $15 in Q4, up from $11 a year earlier. But the cost to serve each customer was very low, at just $0.80.

Last year, the lender’s return on equity reached a record 33%. Even for a digital bank, that’s very impressive.

Founder and CEO David Vélez commented: “As we enter 2026, we remain fully focused on winning in Latin America, while building the capabilities that will allow Nubank to evolve into a global digital banking platform over time.”

Of course, there’s no guarantee the firm will enjoy success in the US and Europe. And there’s even a chance international expansion could significantly increase customer acquisition costs and therefore profitability. Expansion overseas always comes with execution risk.

However, the long-term growth opportunity just in Latin America appears massive. Nu serves roughly 15% of the adult population in Mexico, where it’s now the leading issuer of new credit cards, and just 11% in Colombia.

It still has Chile, Argentina, and Peru to enter, and possibly Panama and Costa Rica in Central America.

True to its origins as a tech-focused disruptor, the company is investing heavily in AI. The CEO says Nu will “continue putting AI directly into customers’ hands, moving closer to our long-term vision of an AI-powered personal banker in every customer’s pockets“.

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At The Motley Fool, we’re big believers in diversification (essentially a fancy term for not putting all your eggs in one basket). In terms of investing, it means spreading your money across different companies, sectors (tech, banking, property, etc), and geographies.

With this in mind, here’s a stock that I think offers something different in terms of growth potential and geographic diversification.

Digital banking powerhouse

Nu Holdings (NYSE:NU) is the company behind Nubank, the largest digital banking platform in Latin America. While founded in Brazil, (still its largest market by far), Nu has expanded to Mexico and Colombia.

Currently a smidgeon over $15, the stock is down 18% since reaching an all-time high of $19 at the end of January.

There are a few reasons why I’m bullish on this neobank (and I’m a shareholder). The first is just how quickly it has been able to capture large amounts of customers, with 113m users in Brazil, representing 62% of the adult population. And it now serves over 15% of Mexico’s population!

Clearly then, its product offering is far more compelling than the region’s legacy banks, many of which have long been notorious for high fees and poor customer service. Nubank has a consistently high NPS (Net Promoter Score), displaying customer satisfaction with its service.

Last year, revenue soared 45% to $16.3bn, with record net profit of $2.9bn. And as the company scales, it’s generating more revenue per client, while keeping customer acquisition costs low (many new customers come via word of mouth). The lender’s credit portfolio expanded 40% to $32.7bn.

Global expansion

While still laser-focused on growing in Brazil, Mexico and Colombia, Nu has firmly set its eyes on international expansion. For example, it has started laying the foundations for US operations.

However, there’s no guarantee that it will have success in the ultra-competitive US market. After all, legacy lenders like Bank of America are hardly slouches when it comes to digital banking.

And there are established fintech players there like Chime, SoFi, and Revolut. Therefore, I do see potential risk if Nu spreads itself too thinly.

Then again, there are almost 70m Latinos in America, so the long-term growth opportunity could be substantial. Management has proven itself highly capable of identifying such growth opportunities, so I’m happy to give the benefit of the doubt.

Valuation?

Turning to valuation, Nu is trading at 3.5 times forward sales and 21.5 times forward earnings. To me, these don’t look like high multiples for a world-class growth company scaling profits rapidly.

The price/earnings-to-growth (PEG) ratio is just under 0.5. Remember, anything below one is often considered potentially undervalued.

Final thoughts

Summing up then, Nu has top-class management, excellent profitability, and big future growth potential. It’s also very innovative, constantly rolling out new products and services, and is deepening adoption of AI.

In a few years’ time, I think Nu stock could look like a steal at $15. As such, this is one I’m looking to add to in the coming weeks.

The post 1 quality stock to consider buying for a brand spanking new ISA appeared first on The Motley Fool UK.

Here are a pair of top fintech firms that I think deserve closer attention right now. 

Cross-border payments 

First up is Wise (LSE:WISE), formerly TransferWise. The company helps individuals, businesses, and financial institutions move money quickly and cheaply across borders.  

In the six months to the end of September, Wise’s cross-border volume increased 24% to £84.9bn, while customer holdings jumped 37% to £25.3bn. Revenue rose 11% to £658m, up from £397m three years earlier.  

If the difference between cross-border volume (24%) and revenue growth (11%) stands out like a sore thumb, that’s to do with Wise’s disruptive business model. Its mission is to drive prices as low as possible to capture market share.

Wise’s average cross-border take rate is at 0.52%, down from 0.64% three years earlier. But this is allowing Wise to capture share in a truly massive global market estimated at roughly £32trn per year. 

Of course, such a large opportunity attracts a fair amount of competition, which adds risk. Wise will have to keep innovating to stay nimble and fend off rivals. 

Meanwhile, with the stock trading at a premium 22.5 times earnings, any growth hiccups could cause problems.  

However, with the share price down 28% since September, I reckon this is a potential buying opportunity worth taking seriously.

Today, Wise has just 1% share of the global small and mid-sized business market, and significantly less in the large enterprise segment of the market. This shows the potential growth opportunity ahead.

Latin American juggernaut

Let’s head to Latin America now with Nu Holdings (NYSE:NU). This is the firm behind Brazilian digital lender Nubank, which continues to grow at a torrid pace.

In Q3, it added another 4.3m new customers, bringing its total to an astonishing 127m. That would be impressive if Nu was a globetrotting lender like HSBC, operating in 57 countries. However, it’s currently in just three (Brazil, Mexico, and Colombia)!

Founded in 2013, Nu is now the third-largest financial institution in Brazil by number of customers, where more than 60% of the adult population use its app. The penetration rate in Mexico (14%) and Colombia (10%) is lower but growing strongly.

This expansion reinforces Nu’s position as the leading digital bank in Latin America and one of the leading fintech platforms globally. 
Nu, Q3 2025

In Q3, revenue surged 39% at constant currency to $4.2bn, with net income rising by the same amount to reach a record $783m.

Meanwhile, the company’s annualised return on equity (ROE), a key profitability metric, reached a record 31%. This signals high profitability alongside the rapid growth. 

The market has rewarded this top-notch performance with a 47% share price rise over the past year. On paper, this makes the stock look pricey at 32 times earnings. If political instability or inflation hits one of its markets, it might pull back sharply.

However, given the high rate of earnings growth here (above 35% between 2025 and 2027), I feel this premium valuation is justified. The forward earnings multiple actually falls to 15 by 2027, making this another top fintech stock to consider for an ISA.

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Beforehand, there were rumours that the 25% tax-free lump sum might be in danger. But the major announcements related to inheritance tax on unspent pension pots. So for investors wanting to build a chunky pot for later in life, the path is still open.

Here, I’ll take a look at how someone starting with £5k in a SIPP today could end up with an attractive sum.

Snowball effect

For simplicity’s sake, let’s assume that this investor is a basic-rate taxpayer. Their £5,000 contribution is topped up by HMRC, becoming £6,250. And if they contributed a further £100 every month, the tax relief would turn this into £125 (or £1,500 per year).

Given that this is a pension account, where the investing runway is likely going to be decades, I don’t think there’s any point in taking excessive risk by swinging for the fences. So an 8% average annual return is a realistic goal, in my opinion.

Yet these modest figures could quietly snowball into something surprisingly meaningful. After 35 years, the SIPP would grow to roughly £360,360, excluding platform fees.

At this point, an investor could choose to draw down 5% per year, equivalent to £18,900 (or £1,575 per month). And while inflation will naturally chip away at spending power over 35 years, it still underlines just how worthwhile a SIPP can is for long-term investors.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Outperforming growth stock

This is why I put bits and bobs into my own SIPP when I can, taking advantage of the tax relief. One stock I have bought a couple of times over the past year is Nu Holdings (NYSE:NU).

It’s up 65% year to date.

So, what does Nu Holdings do? Well, this is the holding company behind Nubank, which is the leading digital bank in Latin America (and now one of the largest fintech platforms globally). 

In Q3, Nu reported that its customer base swelled to 127m. But the incredible thing is that it still only operates in three countries — Brazil, Mexico, and Colombia.

In Brazil, an astonishing 60% of the adult population are Nu customers. However, in Mexico and Colombia, the population penetration rate is still low. Just 14% and 10%, respectively.

This highlights the growth potential ahead in those two countries, never mind worldwide (Nu has ambitious global expansion plans).

Turning to the financials, Q3 revenue jumped 39% to a record $4.2bn, while net income also increased 39% to $783m. Adjusted net income was $829m. This demonstrates how Nu is becoming very profitable as it scales.

Total deposits reached $38.8bn, up 34%, and the credit portfolio expanded 42% to $30.4bn. While this is highly encouraging, it would be naive to assume that Latin America is Switzerland. Inflation, currency risks, and political instability are all risks.

On the other hand, tens of millions of Latin American consumers are accessing financial services for the first time. Traditional banks have not been customer-friendly (high fees, poor customer service, etc), and this is making Nu’s seamless digital banking experience a far superior proposition.

Given the long runway of growth ahead, and excellent profitability and management team, I think the stock is worth considering. I reckon it will continue doing the business in my SIPP over the long run.

The post £5,000 in a SIPP? Here’s how it could snowball into £360k appeared first on The Motley Fool UK.

Run by Andrew Hollingworth, it has returned 77.8% for the three-year period to 30 June. That destroys its Investment Association Global Sector benchmark (25.7%), and also beats both the FTSE 100 and S&P 500.

Helping drive some of the recent portfolio outperformance has been a pair of top growth stocks (which I also own). Let’s take a closer look at them.

A snowball at the top of a hill

The first stock is Nu Holdings (NYSE:NU), which is the firm behind Brazilian digital lender Nubank. It’s up 35% year to date.

Nubank was built from the ground up as a digital-only bank, with no physical branches. It offers customers far superior and cheaper services than the legacy banks across Latin America.

Our enthusiasm for Nubank is that we can see a potential revolution in its customer offering vs sleepy, fat banking incumbents.

Andrew Hollingworth

In Q1, Nu grew its customer base to an incredible 118.6m, adding over 4m in the quarter. Yet it only operates in three countries (Brazil, Mexico, and Colombia). And while around 60% of adults in Brazil are customers, the other two nations offer significant growth potential (never mind elsewhere).

That said, the lender could come unstuck as its credit portfolio grows. If the loss ratio worsens, that could quickly eat into margins and dent investors’ confidence.

Nevertheless, the firm’s fundamentals are impressive. Average monthly revenue per customer has increased from $7 in 2022 to $11.20 in Q1 2025. But among longer-term customers who use more of services, that figure jumps to nearly $26.

This is why Hollingworth has described the company as “a snowball at the top of a hill“. I agree, making this share worth considering for the long term, in my opinion.

Classic disruptor

The second stock I want to highlight from VT Holland Advisors’ portfolio is one I finally bought earlier this month: Wise (LSE: WISE). This fintech stock is up around 31% over the past year.

Wise helps people and businesses send money across borders quickly, cheaply, and transparently. Around two-thirds of the company’s new customers come by word of mouth. 

The firm takes a cut of the transfers, but what Hollingworth likes is how Wise keeps lowering fees as it scales (similar to Nubank). Wise’s cross-border take rate in Q1 was 0.52% globally, down from 0.58% the year before.

The fund manager says this is “classic disruptor behaviour“, with the firm “building a powerful…[and] hard-to-copy scalable network“.

Looking ahead, Wise could face rising competition, with rivals all looking to take share in the massive £32trn cross-border money market. A global economic downturn would also likely slow payment volumes.

Yet, I think Wise is still worth considering right now, along with VT Holland Advisors Fund. The latter’s portfolio of just 30 stocks does present some concentration risk, but I reckon the manager’s strategy to “find great companies run by great managers available at great prices” will continue to bear fruit.

The post 2 growth stocks backed by this British fund that’s soared 77.8% in just 3 years! appeared first on The Motley Fool UK.

In the first quarter, Buffett’s holding company Berkshire Hathaway offloaded a couple of bank stocks, namely Citigroup and Nu Holdings (NYSE: NU). This was part of a pattern, as Berkshire had been cutting its exposure to the financial sector over the preceding quarters.

Here’s why I won’t be following Buffett’s lead by selling my own Nu shares.

A totally different universe

Before getting onto the company, I want to briefly explain why I don’t blindly copy the Oracle of Omaha’s trades.

Berkshire Hathaway is a $1.05trn behemoth, with a stock portfolio worth around $250bn. It also had $347bn in cash at the end of March.

In the second quarter of 2024, Buffett owned roughly 107m Nu shares. That’s roughly 107m more than I do. My position is just a tiny sliver of the 107,118,784 shares I casually rounded down to 107m!

Back then, Berkshire’s Nu holding was worth around $1.38bn, or 0.49% of the portfolio. Therefore, the Nu share price could have trebled and still barely moved the needle for Berkshire.

Fact is, Buffett’s investing universe is completely different to mine. He needs elephant-sized opportunities to move the needle, whereas I don’t. For my infinitely smaller portfolio, a trebling of one of my stocks would make a big difference to performance.

What is Nu anyway?

For those unfamiliar, Nu is a Brazilian fintech company — commonly called Nubank — that operates one of the world’s largest digital banking platforms.

It offers various financial services, including digital current accounts, credit and debit cards, personal loans, insurance, stock and crypto trading, corporate services, and more.

Customer growth has been truly spectacular. It ended 2021 with 53.9m customers across Brazil, Mexico, and Colombia. By the first quarter of this year, that figure had swelled to 118.6m.

Revenue growth has been equally explosive, going from $1.7bn in 2021 to $11.5bn in 2024! Meanwhile, the firm has gone from an adjusted net loss of $26.8m in 2020 to nearly $2bn in net profit last year.

Still early days

Nu’s secret sauce is the far superior banking experience that it’s bringing to Latin America. Customers love the digital-first model and far lower — or zero — fees.

Indeed, the brand is so strong in Brazil that around 60% of the adult population now use the app! And an increasing number are using it as their primary banking account.

Now, one thing to note here is that Nu reports in US dollars but earns in Brazilian, Mexican, and Colombian currencies. So if those weaken, earnings can drop even when local growth is strong. This is a risk.

The stock is also trading at 24 times forward earnings, which isn’t cheap. Any growth hiccups are likely to be punished by the market.

However, execution has been impeccable so far, and forecasts point to a doubling in revenue and trebling in earnings by 2028. So there’s a chance the stock will look cheap in future.

Through geographic expansion and rising customer adoption of services, Nu looks well placed to drive significant earnings growth over the coming years. Buffett may have exited, but I’m certainly not, and reckon it’s worth considering at $13.

The post Warren Buffett’s Berkshire Hathaway dumped this growth stock. Here’s why I won’t appeared first on The Motley Fool UK.

Cellebrite

What it does: Cellebrite is a software-as-a-service enterprise specialising in digital forensics and encrypted data extraction.

By Zaven Boyrazian. In the world of law enforcement and cybersecurity, digital evidence has become a critical. In fact, an estimated 90% of reported crime today has some form of digital element. And with most criminal devices being locked or encrypted, demand for Cellebrite’s (NASDAQ:CLBT) C2C platform has surged.

The platform offers solutions for digital forensics, case & evidence management, and AI-powered analytics. And it is the global standard for extracting evidence from encrypted mobile phones, combating terrorism, fraud, human trafficking, and organised crime.

Revenue has been expanding at a 20% annualised rate over the last five years, with operating profits surging by an average of 44% annually on the back of rapidly expanding margins thanks to the increasingly lucrative opportunities within the digital forensics market.

Of course, such explosive returns invite challenge. And fierce competition is forcing Cellebrite to allocate considerable funds to research & development. If it can’t out-innovate its rivals, the group’s leading position could become compromised.

Nevertheless, given the explosive opportunity and long track record of defying expectations, this is a risk I’m willing to take.

Zaven Boyrazian owns shares in Cellebrite.

Devon Energy

What it does: Devon Energy is an oil and gas producer in the U.S. with a diversified multi-basin portfolio, including in the Delaware Basin.

By Andrew Mackie. I have been looking for an opportunity to enter the pure-play exploration space for some time. With the recent tariff-induced sell-off I took the opportunity to buy my favoured pick Devon Energy (NYSE: DVN).

Unlike oil majors such as BP and Shell, earnings come purely from oil and gas production. The company is effectively a leveraged play on such prices. Unsurprisingly, as prices have fallen for some time, so too as the share price. However, I remain extremely bullish on prices over the next decade plus.

In the short to medium term, I expect natural gas demand to rise significantly off the back of data centre growth. The recent conversion of a decommissioned coal-fired to natural gas power plant in Homer, Pennsylvania, provides a good illustration of demand growth. Unlike nuclear, gas fired power stations can come online very quickly.

Should the US enter a recession in 2025, then oil prices will undoubtedly fall even more, impacting Devon’s profitability. However, with globalisation unwinding, defence spending increasing and the US boosting domestic manufacturing, I expect hydrocarbon demand to remain buoyant well into the future.

Andrew Mackie owns shares in Devon Energy, BP and Shell.

Nu Holdings

What it does: Nu Holdings owns Nubank, which is Latin America’s largest digital bank.

By Ben McPoland. I recently added to my position in Nu Holdings (NYSE: NU). The Brazil-based digital bank ended the first quarter with nearly 119m customers, 19% more than the year before.

Incredibly, 59% of Brazil’s adult population are now customers, while strong growth continued in Mexico (12% of the adult population) and Colombia (8%). Quarterly revenue jumped 40% to $3.2bn on a currency-neutral basis, while adjusted net income rose 37% to $606.5m.

There were some negative currency swings in the quarter, which could continue. Also, the bank’s risk-adjusted net interest margin fell to 8.2%, down from 9.5%. This was largely due to aggressive expansion in Mexico and Colombia, which involves offering higher deposit rates to attract users. So the quarter wasn’t totally flawless.

Nevertheless, I’m very impressed with the way Nu continues to grow at scale. The neobank is barely scratching the surface when it comes to monetising its vast – and growing – base of customers.

The stock isn’t cheap, but the company appears to have a long runway of growth ahead of it, with large swathes of Latin America still either unbanked or underbanked.

Ben McPoland owns shares of Nu Holdings.

RWE

What it does: RWE AG is a leading German energy company focused on renewables, power generation, and trading.

By Mark Hartley. I recently invested in RWE (FRA: RWE) due to its strong financial performance and strategic plans for 2025. Last year, it reported an adjusted EBITDA of €5.7bn and adjusted net income of €2.3bn, surpassing expectations. The energy supplier also announced a €1.5bn share buyback program, reflecting a commitment to shareholder returns.

However, it faces some uncertainties in the US offshore wind market following revised policies that could affect renewable energy. As a result, it recently reduced its five-year investment outlook by €10bn, indicating caution amid these market challenges. This could impact future growth and returns, so I hope the US sees the advantages in renewables and reconsiders its policies.

Despite these risks, I remain optimistic about RWE’s focus on renewables and look forward to seeing it drive innovation in the sector. It also has a decent 3.42% yield and a P/E ratio of 4.65.

Mark Hartley owns shares in RWE.

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Two stocks that stand out to me right now are Nu Holdings (NYSE:NU) and Pinterest (NYSE:PINS). Here’s why I believe both could be smart additions to my long-term portfolio.

A fintech powerhouse

Nu Holdings, better known as Nubank, is one of the world’s largest digital banking platforms. It now serves over 100m customers across Brazil, Mexico, and Colombia, with more expansion planned. The company’s fully digital model allows it to offer a broad suite of financial products with lower costs than traditional banks, fuelling rapid customer acquisition and engagement.

Nu enjoyed a breakou year in 2024. The company reported revenues of $11.5bn, a 58% year-on-year increase, and net income nearly doubled to around $2bn. Active customers grew by 22%, and the average revenue per active client rose to $107.

What’s driving this growth? Nu’s relentless innovation-new products, expansion into new markets, and a focus on underserved populations. Its recent milestone of 10m customers in Mexico highlights its ability to replicate its Brazilian success story elsewhere.

Of course, risks remain. Competition in fintech is fierce, and Nu’s expansion plans could face regulatory or operational hurdles. But with a low debt-to-equity ratio and strong profitability metrics, it looks well-positioned to navigate any challenges.

What’s more, analysts remain bullish, with an average price target of $14. I was hoping to pick the stock up at around $9.50 but may have missed my chance. I’ll keep watching.

Monetising inspiration

Honestly, I forgot Pinterest existed until we started planning some home renovations. And now I’m seeing why it’s still so popular and how artificial intelligence (AI) could be a big driver here.

Unlike platforms focused on news or entertainment, Pinterest is all about discovery and inspiration — users come to plan purchases, find ideas, and curate their interests. This intent-driven usage makes Pinterest especially attractive to advertisers.

The stock’s fundamentals have strengthened in 2025. Pinterest’s board recently authorised a $2bn stock repurchase programme, and its valuation metrics are pretty attractive. In fact, the price-to-earnings-to-growth (PEG) ratio of 0.79 screams undervaluation.

There are risks. The US economy reversed in the first quarter and there’s an expectation that it may enter a recession following the recent trade concerns. That could mean a pullback in intent-driven users and advertising spending. And that would present more of an issue here as margins are a little tight.

However, Pinterest may benefit from TikTok’s regulatory uncertainty. And as mentioned before, I expect to see more supportive trends such as AI delivering more personalised content, better audience targeting, and more efficient content creation.

Analysts see plenty of potential. Some forecasts suggest Pinterest could approach $50 per share in 2025 if advertising demand rebounds and user engagement remains strong. I haven’t quite worked out what price I’d like to pay. But at 14 times forward earnings, it’s certainly not expensive. For now, I’m just watching closely.

The post Looking for the best stocks to buy? Here are 2 I’ve got my eye on appeared first on The Motley Fool UK.

The three stocks are Nu Holdings (NYSE:NU), RH (NYSE:RH), and Carnival (LSE:CCL) (yes, Carnival is a UK stock but it has a primary listing in the US). Anyway, they’ve all been heavily impacted by global economic uncertainty and policies under US President Donald Trump. Despite these challenges, they boast strong fundamentals.

However, the market is choppy. A lot depends on the whim of the US administration and I’m yet to buy any shares since ‘Liberation Day’.

A fintech powerhouse with room to run

Nu Holdings is a leading fintech company in Latin America. The stock is flat over the year, but has traded more than 50% higher than it does today. The downturn has been exacerbated by Trump’s trade policies that have strained international markets, particularly emerging economies.

However, Nu Holdings remains a compelling business. The company reported impressive revenue growth of 49% year on year in its latest quarter, reaching $2.99bn. That was well above analyst expectations. Its customer base has surged by 22% to 114.2m, capitalising on demand for banking services especially among underserved populations. 

Despite challenges such as foreign exchange volatility and narrowing net interest margins, Nu Holdings achieved a huge annualised return on equity of 29% and a net income increase of 85% year on year. It’s pricey at 20 times forward earnings, but this is expected to fall to 6 times by 2027.

Luxury furniture, made in Vietnam

RH (formerly Restoration Hardware) is another stock near its 52-week low that deserves attention. Known for its upmarket furniture and home décor offerings, RH has established itself as a global leader in luxury retail. However, the company mostly manufacturers in Vietnam and is exposed to any tariffs there. As such, management experienced a whirlwind of emotions in recent weeks — the CEO was shocked when he saw what was happening to the share price during the 3 April earnings call.

I’m just keeping a close eye on this one. Tariffs could really impact margins. Current forecasts suggest it’s trading at 15 times forward earnings, falling to five times in just three years. These forecasts will need altering if the tariffs on Vietnam are hard to absorb.

Choppy waters

Carnival is one of the world’s largest cruise operators and its stock price drifted near its 52-week low since the tariff announcements and a threat from the administration to make cruise operators pay more tax. A tariff-induced recession and more taxes aren’t good for business.

Nonetheless, it’s important to note the cruise sector has been performing extremely well since the pandemic. Consumers have increasingly focused on experience-based holidays, providing a real boost for cruise companies. This is evidenced by the fact that Carnival has approximately 80% of capacity booked for 2025 already, providing some shelter from Trump’s tariffs.

Moreover, it has implemented cost-saving measures and fleet upgrades to enhance operational efficiency. And at 9.4 times forward earnings, the stock doesn’t look expensive. I’ve owned this one for some time, but I may double down in the current market.

The post Hunting for an enticing entry point? 3 US stocks to key an eye on appeared first on The Motley Fool UK.

Right now, I think a few stocks look attractive at current prices, even after the massive US market rally yesterday (9 April). Here’s one that’s worth considering, in my opinion.

Fintech disruptor

The stock in question is Nu Holdings (NYSE: NU), which is the parent company of digital bank Nubank. This name isn’t widely known outside of Latin America, yet within the region it certainly is — it has over 114m customers!

This actually makes it the largest digital bank outside China, despite only operating in three countries (Brazil, Mexico, and Colombia). Incredibly, the company was only founded 12 years ago.

Over half of adults in Brazil now use Nubank’s app, which offers various accounts, loans, insurance, stock and crypto trading, and more. And 61% of active customers are using it as their primary bank account.

It’s disrupting the traditional banking industry in the region through innovation, low fees, and by offering a frictionless service. Oh, and by dishing out purple credit and debit cards because that was the most anti-bank colour the firm’s founders could imagine!

I had to open a bank account…when I moved to Brazil [in 2012], and it was one of the worst experiences I ever imagined, going to the branch, being trapped in this bulletproof door, being escorted by armed policemen, waiting an hour to get attended and later going back to the branch about six times, then waiting five months.

Co-founder and CEO David Vélez, in an interview with Fortune.

Attractive-looking business (and stock)

Revenue has grown tremendously in recent years, from $1.7bn in 2021 to $11.5bn last year. But this isn’t some cash-incinerating fintech — its digital-first approach is leading it to become highly profitable.

In the fourth quarter, for example, it cost Nubank $0.80 to serve each of its customers per month. Yet it generated an average of $10.70 in monthly revenue per active customer. Older customers generate around $25. This showcases the company’s strong operating leverage.  

Last year, net income almost doubled to just under $2bn. And looking ahead, both revenue and earnings are expected to continue growing strongly.

The share price has fallen 31% since November and now sits at just under $11. Based on forecasts, this puts the stock on a forward price-to-earnings ratio of 19.7, then falling as low as 10 by 2027. These multiples look very attractive.

Massive opportunity

As far as risks go, there a couple worth pointing out. The first is that the number of non-performing loans on its books could rise if its main market, Brazil, were to suffer a recession.

Meanwhile, it faces stiff competition from MercadoLibre‘s fintech division (Mercado Pago) and the UK’s Revolut. It will have to keep innovating with ambitious rivals like that around.

Finally, Latin America is no stranger to periods to economic instability and high inflation. So this is worth bearing in mind.

On balance though, I think the stock is worth considering at $10. Many millions of people across Latin America remain either unbanked or underbanked, presenting a very large long-term growth opportunity.

The post Down 31%! 1 top growth stock to consider at $10 for a Stocks and Shares ISA appeared first on The Motley Fool UK.