Digital bank Nu Holdings (NU 2.00%) has a market capitalization of $72 billion — and that makes it a sizable business. However, many American investors might not know that much about the company because it operates in Latin America and has no U.S. presence.

Here’s a perfect example of why it’s important to understand that there are investment opportunities in international markets. This fintech stock might prove that point. Should you buy Nu Holdings while it’s trading below $16? Here’s why that might be a smart decision.

Customer additions and revenue growth are through the roof

The market loves a good growth story — and Nu Holdings is exactly that. The company’s customer base went from 65 million at the end of Q2 2022 to 123 million as of June 30. In Nu’s home country of Brazil, the business counts 60% of the adult population as its customers. Newer markets of Mexico and Colombia are registering remarkable success, even though Nu’s penetration is still in the early stages in these countries.

Nu is benefiting from some notable tailwinds. It helps that internet and smartphone penetration in Latin America continue to grow. This provides a favorable backdrop for a digital-only bank like Nu to find broader adoption.

Essentially, Nu is riding the wave of the Latin American economy’s development. Given that a large portion of the population here is still unbanked or underbanked, Nu still has lots of potential for growth.

The company’s revenue increased 29% year over year in Q2. Wall Street consensus sell-side analyst estimates believe the top line will rise by 67% between 2025 and 2027. That outlook should make shareholders excited.

Nu’s focus on product innovation should help it reach more customers. Management has also hinted at entering new countries in the future, basically replicating strategies that have worked so well in its existing markets.

This is an extremely profitable enterprise

Companies that have access to cheap capital usually care about growth more than anything else when it comes to strategic priorities. That’s why over the past decade or so, some businesses have put up huge gains, adding customers and increasing sales rapidly. The issue, however, is that these companies don’t care about profits.

Nu bucks this trend and stands out. It’s an extremely profitable enterprise, which might be a surprise to many. Nu registered $1.2 billion in net income through the first six months of 2025. That translated to a phenomenal net profit margin of 17.4%. The margin has generally increased in recent years, which underscores the company’s ability to scale up in a lucrative manner.

Investors should pay attention to the unit economics. It cost the company $0.80 per month in Q2 to serve the average customer. But on the flip side, the average revenue per active customer came in at $12.20. After viewing these two figures, it makes sense why the leadership team is trying to grow so quickly.

Nu also has the advantage of not running any physical bank branches. A brick-and-mortar retail strategy like this would entail sizable operating expenses. Nu avoids this, which can help drive higher margins over time.

This fintech stock trades at a reasonable valuation

In the past three years, Nu’s shares have skyrocketed 262% (as of Oct. 16), thanks to incredible fundamental performs that has caught the market’s attention. After such a phenomenal gain, investors might be questioning the stock’s appeal. The last thing you’d want to do is overpay.

That’s certainly not the case here. The valuation still looks very compelling. Investors can buy the stock at a forward price-to-earnings ratio of 18.7. At under $16 per share, there is sizable upside over the next five years from the possibility of both higher earnings and valuation expansion.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.

Even Southeast Asia’s finance sector is becoming more halal. Islamic finance in Southeast Asia totaled roughly $859 billion in 2023, up from $754 billion in 2020, according to a study from the Islamic Corporation for the Development of the Private Sector and the London Stock Exchange Group.

Mambu, a cloud-native, software-as-a-service, composable core banking platform based in Amsterdam, wants to tap this growing market. “The Southeast Asian market, particularly Malaysia and Indonesia, is incredibly dynamic in terms of how they’ve grown in the Islamic banking space,” says David Becker, managing director and head of APAC sales at the firm. 

The company already works with Southeast Asian clients like Bank Islam, Malaysia’s largest provider of shariah-compliant financial products, and Bank Jago, an Indonesian digital bank. 

Becker says that Islamic finance is growing just as quickly as traditional banking, and so Mambu hopes to provide tools to support shariah-compliant products like profit sharing. 

Unlike in conventional banking, Islamic financial institutions must avoid companies that deal in products that are harmful or considered “haram”, like pork, alcohol, or gambling. 

Islamic banks also can’t charge interest and so must instead generate a return through some other mechanism, like profit-sharing or leasing. 

Becker is optimistic that Southeast Asia’s younger and more mobile-savvy population will gravitate towards digital financial solutions—and particularly those that reflect Islamic principles.

Indonesia, the world’s largest Muslim country, is a clear target market for Islamic finance. Neighboring Malaysia, where two thirds of the population identify as Muslim, is another option. There are also significant Muslim populations across Singapore, the Philippines, and Thailand.

Malaysia, the first country in the region to adopt Islamic finance, has “reached a peak” when it comes to growth, says Cedomir Nestorovic, a professor at the ESSEC Business School in Singapore who focuses on Islamic business. Instead, Indonesia offers more potential for retail banking and “takaful” insurance, a type that follows Islamic principles.

“There is plenty of room for progress in the country, so many companies want to come to Indonesia,” Nestorovic says.

Yet he cautions that Southeast Asia presents its own risks. For one, unlike the Middle East’s more homogenous market, Southeast Asia is more heterogenous, meaning businesses will need to tailor their offerings to an array of different economies, consumer bases and regulatory regimes. 

Becker, from Mambu, acknowledges the challenges present in Southeast Asia, including the need to follow regulations. Yet the size of the opportunity outweighs the risks. 

“We just see it growing and growing, and I think that’s a factor in why governments and regulators have been so supportive,” he says.