Fintech stocks range from banks that lean on new innovations to technology companies that offer financial services. Because the companies can vary widely, it can be difficult to decipher which fintech stocks are the best to buy.
If you currently have $1,000 to invest and are trying to find one of the best fintech stocks available, there are a few good reasons to consider Now Holdings (NYSE: NOW). Here’s what you need to know.
Nu Holdings is the parent company of Brazil-based Nubank and offers customers a wide range of services including credit cards, checking and savings accounts, investing, crypto, personal loans and, most recently, mobile phone plans.
That’s quite a list of services, and one of the company’s strengths is providing numerous financial solutions to as many customers as possible in Brazil, Colombia and Mexico. Just ten years after Nu first launched in Brazil, Nu had almost 110 million customers at the end of the third quarter (which ended on September 30), which was 23% more than the previous year’s quarter.
That sounds impressive enough on its own, but it’s also worth noting that Nu has the largest number of active credit customers in all of Brazil. More than half of adults in the province have a Nubank account, and the percentage of monthly active customers reached 84% in the third quarter.
Nu’s has expanded its services to other countries in recent years and now has 9 million customers in Mexico and 2 million in Colombia. While this is a modest amount compared to Brazil, customer growth accelerated by almost 16% in the third quarter, and Nu is already Mexico’s leading digital financial platform.
Some fintech stocks are fast-growing companies but fall short on profitability. Not Now Holdings. The company posted a net profit in 2021 and continues to expand its margins.
Management said in a third-quarter press release that Nu has kept the costs of serving its customers low while receiving a high return on equity in acquiring new customers, resulting in increasing net income.
Revenue rose 58% to $2.9 billion in the third quarter, and Nu’s net profit rose 82% to $553 million. That impressive growth was helped by the company’s expanding gross profit margins, which rose to 46%, compared to 43% in the same quarter last year.
With its strong customer growth, expansion into other countries and rising profit figures, Nu seems like a good place to bet $1,000 in the long term. The company’s stock currently has a price-to-earnings ratio of 33, which isn’t exactly cheap. But compared to the S&P500‘s price-to-earnings ratio of 30.9 and fellow fintech SoFi technologies‘ at a multiple of 133, Nu stock looks well priced.
