Nu Holdings (NYSE: NU) is a Brazil-based company that's on investors' radars because it's in the Berkshire Hathaway portfolio. It's a tiny percentage of the whole equity portfolio, accounting for only 0.3%, but it packs a strong punch as one of its only true growth stocks. Is it right for the individual investor's portfolio?

Nu is reporting extraordinary results

Nu is a digital bank that operates in Brazil, Mexico, and Colombia, and it has demonstrated incredible growth and increasing profitability during the past few years. Revenue is increasing by high double-digit percentages, and Nu has been adding millions of new members to its platform. It closed out 2023 with 93.9 million account holders, 19 million more than last year, and $8 billion in revenue, a 62% increase.

Fourth-quarter gross profit increased fourfold to more than $1.1 billion with a 48% margin, and net income increased from $58 million last year to $360 million this year with a 23% margin.

The credit portfolio has been performing well despite Brazil's economy volatility. The loan portfolio, which includes personal loans and credit cards, increased 49% year over year to $18.2 billion, and its total interest-earning portfolio, which also includes things like installment balances and revolving balances, increased 91%. This led to an 85% increase in net interest income with an 18.3% margin, five points higher than last year. Deposits were up 38% over last year to $23.7 billion.

Nu has a huge growth opportunity

Can Nu keep it up? It has multiple growth drivers that each bring tons of potential and together create a powerhouse growth company.

Nu offers an array of financial services on its all-digital app, and while it attracts new customers through its easy-to-use interface and low fees, it cross-sells new products to generate higher sales per active user. Average revenue per active user (ARPAC) continues to rise both sequentially and year over year, increasing from $8.20 in the 2022 fourth quarter to $10.60 in the 2023 fourth quarter.

More than half of the adult population in Brazil is already using Nu's platform, but Nu is still adding millions of new customer quarterly in its home country, with an average pace of 1.3 million monthly. It's just getting started in Mexico and Colombia, where it has a small percentage of the population as customers. It added 1 million customers in Mexico in the fourth quarter for a total of 5.2 million. It recently raised its deposit rate in Mexico to attract more customers, and it quadrupled deposits to $1 billion within two months. Although that required a substantial investment, it believes it comes out ahead as it speeds up its flywheel with more customers, more referrals, and more data. It's launching a similar program in the even newer Colombian market, where it only got its financial license in December. It only has 800,000 customers in Colombia, and that number could quickly skyrocket.

Nu is also moving upmarket from its mass branding, and it launched several new products aimed at this clientele. Purchase volume on its Ultraviolet credit card, which targets this market, increased 104% year over year in the fourth quarter to $1.1 billion, and customers doubled.

Is it too late to buy?

Nu stock more than doubled last year, and it's already up almost 40% this year. However, it still doesn't seem expensive, trading at a forward one-year price-to-earnings ratio of only 19.

Nu is demonstrating growth and efficiency, and it's tapping into huge growth opportunities. I say go with Warren Buffett here -- if you're looking to add a growth stock to your portfolio, Nu is an excellent candidate.

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Jennifer Saibil has positions in Nu Holdings. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.

Nu Stock: Buy, Sell, or Hold? was originally published by The Motley Fool