1 Monster Stock to Hold for the Next 5 Years
Key Points
This company's revenue and net income were up 45% and 50%, respectively, in the fourth quarter of 2025.
After achieving a dominant position in Latin America, the digital bank wants to tap the U.S. market.
Shares trade at a below-market multiple, but investors shouldn't overlook credit risk.
Identifying winning businesses at the right time can be a boon for investors. All it takes is conviction, patience, and the ability to hold through periods of volatility. Your portfolio will thank you.
It's worth taking a closer look at this fintech enterprise, which is showing no signs of slowing down. Its shares might be trading 21% off their peak, but they've soared 216% in the past three years (as of March 5). There are reasons to believe the winning returns will continue.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Here's one monster stock to hold for the next five years.
Image source: Getty Images.
Reporting another quarter of fantastic results
Nu Holdings (NYSE: NU) continues to make it easy for investors to be optimistic. Its latest financial results were impressive.
During the fourth quarter of 2025 (ended Dec. 31), revenue jumped 45% year over year to $4.9 billion. This was an acceleration compared to Q3. Nu added 4 million net new customers in the period, bringing the total to 131 million.
Its profits grew at a faster rate than the top line. Net income soared 50% in Q4. Nu has achieved incredible unit economics that support its earnings. The average cost to serve a customer of $0.80 is significantly below the average revenue per customer of $15.
The Latin American digital bank is entering the U.S.
Up until this point, Nu operated solely within Latin America. It has a fantastic position in its home market of Brazil, where 62% of the adult population are customers. It's also building a budding presence in Mexico and Colombia. Operating a digital bank that benefits from technological progress in an emerging region has supported Nu's expansion.
Nu now has its sights set on the U.S. It recently obtained a bank charter. Operations will commence within 18 months. But this will invite stiff competition in a financial services industry that's certainly more developed than the one in Latin America.
"We're going to have a very targeted strategy," CEO David Vélez said on the Q4 2025 earnings call about the U.S.
Perhaps this is a maturation phase that sets the stage for growth in the future to moderate. Sell-side analysts expect revenue to increase at a compound annual rate of 32% between 2025 and 2028.
Shares trade at an attractive valuation
It's hard to believe that with Nu's strong fundamentals, the stock still trades at a forward price-to-earnings ratio of 18.7. This is cheaper than the S&P 500 index. In my view, this setup makes Nu a no-brainer stock to buy and hold.
However, the market might be thinking about the risks. Like any bank, Nu must prove that its credit quality can hold up in various economic scenarios, as it has a sizable loan book of $33 billion, mostly consisting of the credit card portfolio. There's no reason to worry yet, as non-performing loans actually improved year over year in Q4.
While this is something that should be closely monitored, I give the leadership team the benefit of the doubt. And that supports my argument to buy Nu.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.