While Warren Buffett’s portfolio brims with a plethora of captivating stocks, emulating his every move isn’t a wise strategy. Instead, focusing on specific gems such as Nu, Floor & Decor, and Sirius XM might be the smart choice for savvy investors.
Discovering Nu: A Financial Gem in Latin America
Buffett, known for his acumen in financial services, affirming his prowess with a Latin American fintech stock’s success. Nu, as the parent of Nubank, offers a burgeoning alternative to traditional banking across Brazil, Mexico, and Colombia. Its recent fourth-quarter results revealed impressive growth.
Evidently, the platform’s revenue spiked by 57% to $2.4 billion on a foreign exchange-neutral basis, surpassing analysts’ 53% predictions. With 93.9 million accounts and a 26% surge over the last year, Nu’s allure is undeniable. Even more impressive, its revenue escalation outpaces user growth — a testament to its sticky platform. Additionally, a 23% rise in average revenue per active customer coupled with stable servicing costs is fueling its profitability.
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Nu recently concluded its sixth consecutive profitable quarter, showcasing a favorable trend in bottom-line growth. Although its current stock valuation at 49 times trailing earnings may seem high by Buffett’s standards, its 154% surge since last year points to its underlying strength. What might appear overpriced today could become a bargain in hindsight, a common thread in the growth-stock narrative.
Riding the Wave with Floor & Decor
Another standout from Berkshire Hathaway’s stable, Floor & Decor, delivered promising financials post-market close on Thursday. As a specialty retailer and flooring distributor facing market challenges, its resilience comes to the fore.
The fourth-quarter figures reflected stagnant net sales at $1.05 billion, with a significant dip in comparable-store sales masked by an expanding store count, now at 221. Despite a 50% plunge in earnings per share to $0.34, this setback was mitigated by surpassing analyst forecasts of $0.26 of net income on $1.01 billion in sales.
Despite the current headwinds, Floor & Decor’s strategic positioning in anticipation of market recovery — driven by upcoming real estate sales catalyzed by falling mortgage rates — sets the stage for a lucrative future. As the market gears up for a resurgence in home renovations, Floor & Decor’s market presence positions it well to capitalize on this upswing.
Sirius XM: Awaiting its Resurgence
Sirius XM, navigating a challenging 2023 with its first-ever revenue decline, remains a resilient player with growth potential. The allure lies in its imminent rebound as commuters return to normalcy, boosting subscription usage amid recovery.
Similar to Floor & Decor, Sirius XM stands to benefit from a surge in commute activities, elevating the value of its subscription service. While its modest 2.3% dividend yield pales in comparison, it offers a steady income stream amidst recovery anticipation.
Considering an Investment in Nu?
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Rick Munarriz holds positions in Nu. The Motley Fool has stakes in and endorses Berkshire Hathaway and Nu. The Motley Fool suggests Nu and manages a disclosure policy.
Views expressed herein are the author’s own and not necessarily reflective of Nasdaq, Inc.
