1 Cathie Wood and Warren Buffett Stock that could go parabolic in 2025

Two investors who couldn’t be more opposite are Cathie Wood and Warren Buffett. Wood is the CEO and Chief Investment Officer of Ark Invest, a firm that focuses on investments in emerging topics such as artificial intelligence (AI) or genomics. By contrast, Buffett spent most of his tenure in Berkshire Hathaway own blue chip stocks as opposed to higher risk, volatile opportunities in growth sectors.
Yet despite their different philosophies, Wood and Buffett have some overlap between their respective portfolios. A company that Ark and Berkshire both own is named Now Holdings (NYSE: NOW). Now a fintech actor that focuses specifically on Latin America and South America.
We dive into why Nu now looks particularly attractive from a valuation perspective and make the case that 2025 could be a breakout year for this under-the-radar trading opportunity.
Nu is a digital financial services platform that provides its users with an inclusive suite of products ranging from checking and savings accounts, investment, loans, and more. For most of its history, Nu has focused on markets such as Brazil, Colombia and Mexico.
However, in December the company announced it was participating in an investment round for digital banking platform Tyme Group – which boasts 15 million customers in South Africa and the Philippines.
At the end of the third quarter (ended September 30), Nu had 110 million members on its platform, which reported 23% year-on-year growth. In addition, the company’s average revenue per user (ARPU) gradually increased to $11 per member.
By making their customers more profitable over time, Nu was able to widen their margins and expand profitability. During the third quarter, Nu’s gross margin increased by 300 basis points and net income increased by 83% year over year to $553 million.
Per the chart below, Nu trades right in the middle of this peer group of other international fintech operations based on the price-to-sales (P/S) ratio.
While this might imply that Nu is attractively valued relative to this cohort, it is the underlying trend in the company’s P/S that stops me. Nu’s UP/S has been steadily declining in recent months. I think a major reason for this revolves around the macroeconomic conditions throughout Latin America, particularly in Brazil.
Although such concerns are valid, I don’t quite see this dynamic as a reason to sell the stock.
A stock that has had a hard time for the last two years is SoFi. SoFi is a very similar business to Nu in that it offers many of the same basic financial services, all through the convenience of a mobile app.
https://s.yimg.com/ny/api/res/1.2/yDpF4srLILfgnt5kIdNhFA–/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD04MDA-/https://media.zenfs.com/en/motleyfool.com/7db231e34ff63592ea2435f7d8e9164d
2025-01-11 23:41:00