My Shares and Shares ISA grew to become a sea of crimson originally of this loopy April. Nevertheless, historical past teaches us that sudden market downturns typically current nice shopping for alternatives for long-term buyers.

Proper now, I believe just a few shares look enticing at present costs, even after the large US market rally yesterday (9 April). Right here’s one which’s value contemplating, for my part.

Fintech disruptor

The inventory in query is Nu Holdings (NYSE: NU), which is the mother or father firm of digital financial institution Nubank. This title isn’t broadly identified outdoors of Latin America, but throughout the area it definitely is — it has over 114m prospects!

This really makes it the biggest digital financial institution outdoors China, regardless of solely working in three nations (Brazil, Mexico, and Colombia). Extremely, the corporate was solely based 12 years in the past.

Over half of adults in Brazil now use Nubank’s app, which gives varied accounts, loans, insurance coverage, inventory and crypto buying and selling, and extra. And 61% of energetic prospects are utilizing it as their major checking account.

It’s disrupting the standard banking business within the area by way of innovation, low charges, and by providing a frictionless service. Oh, and by meting out purple credit score and debit playing cards as a result of that was probably the most anti-bank color the agency’s founders may think about!

I needed to open a checking account…after I moved to Brazil [in 2012], and it was one of many worst experiences I ever imagined, going to the department, being trapped on this bulletproof door, being escorted by armed policemen, ready an hour to get attended and later going again to the department about six instances, then ready 5 months.

Co-founder and CEO David Vélez, in an interview with Fortune.

Engaging-looking enterprise (and inventory)

Income has grown tremendously lately, from $1.7bn in 2021 to $11.5bn final yr. However this isn’t some cash-incinerating fintech — its digital-first method is main it to turn into extremely worthwhile.

Within the fourth quarter, for instance, it price Nubank $0.80 to serve every of its prospects per 30 days. But it generated a mean of $10.70 in month-to-month income per energetic buyer. Older prospects generate round $25. This showcases the corporate’s robust working leverage.  

Final yr, internet revenue nearly doubled to simply below $2bn. And looking out forward, each income and earnings are anticipated to proceed rising strongly.

The share price has fallen 31% since November and now sits at slightly below $11. Primarily based on forecasts, this places the inventory on a ahead price-to-earnings ratio of 19.7, then falling as little as 10 by 2027. These multiples look very enticing.

Huge alternative

So far as dangers go, there a pair value declaring. The primary is that the variety of non-performing loans on its books may rise if its essential market, Brazil, had been to undergo a recession.

In the meantime, it faces stiff competitors from MercadoLibre‘s fintech division (Mercado Pago) and the UK’s Revolut. It should preserve innovating with bold rivals like that round.

Lastly, Latin America isn’t any stranger to durations to financial instability and excessive inflation. So that is value making an allowance for.

On stability although, I believe the inventory is value contemplating at $10. Many tens of millions of individuals throughout Latin America stay both unbanked or underbanked, presenting a really giant long-term development alternative.