3 Growth Stocks To Buy Near Their 52 Weeks Lows

$SoFi Technologies Inc.(SOFI)$ $Nu Holdings Ltd.(NU)$ $Block(SQ)$ $Enphase Energy(ENPH)$

Today, I’ve decided to discussing three growth stocks currently trading near their lows, providing a quick overview, and sharing my thoughts.

Before diving in, I always like to remind viewers that with growth stocks, the focus is less on free cash flow yield or trailing earnings and more on future potential. Growth investing often involves speculation, with many "what-ifs." To manage risk, I recommend proper position sizing—don’t allocate too much capital to these stocks. If you’re right, even a small position can generate significant returns if a stock appreciates 10x or more. If you’re wrong, your losses will be limited.

1 NU Holdings

The first stock I want to discuss is Nu Holdings, which is hugely popular on YouTube, is the parent company of Nubank, is a leading digital banking platform operating primarily in Brazil, Mexico, and Colombia. Founded in 2013, Nubank has rapidly expanded its customer base by offering accessible and user-friendly financial services, particularly targeting the underbanked population in Latin America.. The stock is down 30% from its all-time high and is currently trading around $10.95, the same level it was at in early 2024. Nu Holdings is essentially a digital or online bank, similar to SoFi but much larger, with over 110 million members. Most of its operations are in Brazil, but it has expanded into Mexico and Colombia since late 2020.

The growth has been remarkable: 20 million new members year-over-year, 56% revenue growth, and a 46% gross profit margin. However, despite these impressive numbers, the stock has struggled recently due to challenges in Brazil, including currency depreciation and a weaker economy. The Brazilian real has dropped 21.5% over the past year, which, along with a strong U.S. dollar, has made emerging market investments less attractive.

Valuation-wise, Nu Holdings is trading at 19.7x forward earnings, well below its historical mean of 26x. Given its forward growth prospects—41% EPS growth expected next year and 39-42% in subsequent years—it seems undervalued. However, geopolitical risks and Brazil’s economic conditions remain key concerns.

Growth Prospects:

• Customer Base Expansion: By Q3 2024, Nubank's customer base reached 110 million, an increase of 5.2 million customers during the quarter, indicating robust growth and market penetration.

• Analyst Projections: Analysts forecast a 74% increase in full-year EPS to $0.42, with further growth anticipated in 2025.

Recent Developments:

• Investor Interest: Nu Holdings has attracted significant investments from notable figures such as Warren Buffett and Cathie Wood, underscoring confidence in its business model and growth potential.

• Profitability Milestone: The company achieved profitability in 2023 and has maintained positive earnings each quarter since Q3 2022, demonstrating operational efficiency and sustainable growth.

Considerations:

Nu Holdings operates in a competitive and evolving digital banking landscape. While its growth metrics are impressive, investors should monitor factors such as market saturation, regulatory changes, and economic conditions in its primary markets.

For those with a high risk tolerance and patience, Nu Holdings appears to be an attractive buy as a small-cap foreign bank. However, I don’t personally own it since I tend to avoid banking stocks.

2 Block SQ

The second stock is Block (SQ), a U.S.-based company also expanding internationally, formerly known as Square, is a prominent American technology company specializing in financial services. Founded in 2009 by Jack Dorsey and Jim McKelvey, Block offers a range of products including point-of-sale systems, the Cash App for peer-to-peer payments, and has expanded into areas like Bitcoin mining and buy now, pay later services through its acquisition of Afterpay.

Once trading at $270 in 2021, it’s now at $86, the same level as in 2018. Block owns Cash App, which has 57 million active users, and Square, a platform for merchants. The company has also ventured into the buy-now-pay-later space.

Cash App generates over $70 billion in inflows and is a key growth driver. Gross profits have grown significantly, and the stock currently trades at 20x forward earnings (non-GAAP). However, after accounting for stock-based compensation, it’s closer to 30-32x. Based on a conservative valuation model, I see about 76% upside over the next four years.

While Block looks interesting, I believe there are better opportunities in the market. It becomes more attractive at a lower price, around $77.

Growth Prospects:

Analysts have a positive outlook on Block's future growth, with a consensus price target of $90.51, indicating potential upside from the current stock price.

Recent Developments:

• Bitcoin Mining Initiative: Block has ventured into Bitcoin mining, developing its own mining system and deploying new ASIC mining chips. This move aims to decentralize Bitcoin mining and could become a significant revenue stream.

• Product and Sales Investments: The company has increased investments in product development and sales, which are expected to drive future growth in gross payment volume for its Square segment.

Considerations:

While Block has demonstrated strong growth and profitability, its stock valuation is relatively high compared to industry averages. Investors should weigh the company's growth prospects against its current valuation metrics.

3 Enphase Energy

The third stock is Enphase Energy (ENPH), a solar-focused company known for its microinverters and home solutions. Enphase has struggled, trading at the same price as in 2020. However, it appears to be turning a corner, with revenues and earnings showing improvement in recent quarters.

The stock is trading at 20x forward earnings (non-GAAP), but with stock-based compensation factored in, it’s closer to 30x. It’s expected to grow EPS by 74% next year, which could provide substantial upside if achieved. However, uncertainties remain, including potential changes to solar tax credits under the new administration.

Based on my calculations, Enphase could see 124% upside over the next four years if estimates are met. It’s a speculative buy but carries risks. Personally, I prefer First Solar (FSLR) over Enphase.

Of the three stocks discussed, Nu Holdings stands out as my top pick due to its growth potential and discounted valuation. That said, I wouldn’t put my life savings into any of these stocks—they’re speculative plays, not blue-chip giants like Google or Amazon.

Growth Prospects:

• Analyst Ratings: The consensus among 29 Wall Street analysts is a "Moderate Buy," with an average 12-month price target of $90.65, indicating a potential upside of approximately 35.56%.

• Product Development: Enphase plans to release new products, including fourth-generation batteries and the IQ9 microinverter, in 2025, which could enhance its market position.

Recent Developments:

• Restructuring Plan: In November 2024, Enphase announced a plan to reduce its workforce by about 17%, affecting approximately 500 employees and contractors, and to terminate some operations in Mexico. This restructuring aims to align the workforce and cost structure with business needs and is expected to be completed by mid-2025.

• Market Challenges: The company faces challenges due to softening demand in Europe and increased competition, which have impacted its financial performance.

Considerations:

While Enphase has a strong position in the renewable energy sector, recent financial results indicate challenges that may affect short-term performance. Investors should monitor the company's restructuring efforts and market conditions in the solar industry.

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