A record number of companies went public through IPO and SPAC in 2021 and two companies that recently went public in the fourth quarter caught our attention. Nu Holdings (NU) and Enfusion (ENFN) are the two latest IPO stocks both with a very compelling prospect and we think the stocks are worth considering.
Nu Holdings (NU) is a fintech company based in Brazil. It is currently the largest financial technology bank in Latin America. The company mainly operates in Brazil, Mexico, and Colombia. It offers products such as digital accounts, credit cards, personal loans, insurance, and investments. Its digital accounts allow customers to make and receive transfers, pay bills, and make purchases all through their mobile phones. Being a Neobank, customers are able to access all products and solutions online, this gives a competitive advantage to Nu Holdings when compared to other traditional banks in Brazil. Nu Holdings is disrupting the banking industry by providing a much more accessible and efficient banking solution to the population. There are currently 34 million unbanked adults in Brazil and 40 million unbanked adults in Mexico, which presents a large addressable market for Nu Holdings. The Buffet-backed company grew revenue by almost 100% year over year for the first 9 months of 2021 and is poised to continue its hyper-growth rates given its strong tailwind in the fintech industry.
Enfusion (ENFN) is a financial SaaS (software as a service) company in the investment management industry that provides portfolio management systems to clients such as private equity, hedge funds, and family offices. Existing investment management systems are very fragmented and hard to use, therefore the company is trying to disrupt the industry by providing a much more streamlined end-to-end solution for asset managers. Enfusion combines portfolio management system, order execution and management system, accounting, and analytics all into one system, which creates a much more efficient workflow for clients. The company recently announced that leading crypto trading firm Coinbase (COIN) decided to integrate Enfusion’s solution into their system for cryptocurrency trades. Enfusion grew revenue 38% year over year for H1 2021 with a net dollar retention rate of 122%. The company is also profitable with an EBITDA margin of 26.3%. With the asset management market continuing to grow and Enfusion expanding internationally, the company is poised to accelerate its growth.
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