I’ve been scouring the market for quality growth stocks that have dipped by double digits in recent months. I didn’t have to look far as many such shares have pulled back sharply due to uncertainty about interest rates and artificial intelligence (AI) disruption.
Here’s one stock that keeps standing out to me as a dip-buying opportunity worth assessing more closely.
Something Nu
The stock in question is Nu Holdings (NYSE:NU), the company behind Nubank. If any reader has visited Brazil, they’re probably familiar with the digital bank’s purple cards. An incredible 100m Brazilians are now monthly active customers!
This makes Nu the largest private financial institution in Latin America’s biggest economy. But adoption is also happening quickly in Mexico and Colombia, where it now has over 15m and 5m customers respectively.
What’s exciting here is that the lender’s already firmly profitable. In Q1, it generated net income of $871m on revenue of $5.3bn, with an attractive return on equity (ROE) of 29%. But its average revenue per active customer (ARPAC) continues to rise as newer customer cohorts mature.
Indeed, ARPAC has expanded sequentially every quarter for four years, reaching $16 in Q1. But mature cohorts in Brazil generate almost $27 as they’ve moved their payroll, taken out loans, insurance, and started investing with Nu.
This highlights the scalability of the platform.
The banking system in Mexico remains structurally under-penetrated. Cash still dominates everyday transactions. Less than half of adults hold a formal credit product, and a meaningful portion of the population still lacks access to banking.
Nu Holdings, Q1, 2026.
Is Nu taking on too much risk?
As a shareholder, the question I’m asking now is whether the lender can continue increasing revenue per user without taking on excessive credit risk (riskier lending).
In Q1, the credit portfolio expanded 40% to $37.2bn, including a sharp rise in unsecured personal loans (up 53% to $10bn). The 15-to-90-day non-performing loan ratio ticked up to 5%, a 89 basis points rise from Q4 2025.
Management put this mainly down to post-holiday seasonality, which does fit with Q1 patterns in previous years. The 90+ day ratio actually improved slightly to 6.5%, so I don’t see any fundamental deterioration in asset quality.
I think the opportunity to displace the region’s traditional banking system is a uniquely massive one, so is worth pursuing at pace. But it’s worth keeping an eye on non-performing loans moving forward.
Why does the stock look so cheap?
The stock’s down 31% since January, giving it a forward earnings multiple of 17. This drops to just 8.9 by 2028, if Wall Street has its profit forecasts correct.
Why is it so cheap? Well, Latin America can be economically and politically volatile. And there’s currency risk to consider as well here, as Nu reports earnings in US dollars but its business is tied to the Brazilian, Mexican and Colombian currencies.
Another current issue is that levels of household debt are rising in Brazil. However, it’s worth noting that employment remains strong there and Desenrola 2.0 — a massive Brazilian government debt-relief and debt-renegotiation programme — is expected to act as a tailwind later in 2026.
Weighing everything up, I think the stock’s worth considering at $12. It’s on my own ‘to buy’ list for June.
Should you invest £5,000 in Nu Holdings right now?
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Ben McPoland has positions in Nu Holdings.
