Happy Monday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US stocks fell Monday as investors awaited key earnings reports. The S&P 500 hit a new record, rising 0.8%, the Dow gained 0.5%, and the Nasdaq climbed 0.9%.

• 📈 | One Notable Gainer: Sirius XM rose 7.9% after Berkshire Hathaway disclosed buying 3.6 million more shares, bringing its total holdings to over 108 million, per a securities filing.

• 📉 | One Notable Decliner: Boeing shares fell 1.3% after announcing a 10% workforce cut, delaying 777X delivery, and forecasting a larger Q3 loss amid an ongoing machinist strike.

• 🏦 | Tomorrow's Trade: Nu Kid on the Block! Scroll down for more.

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MARKET MOVERS

Caterpillar, Ibotta, Hims & Hers

CAT (-1.9%) Caterpillar downgraded by Morgan Stanley. Here's why. (YF)

IBTA (+7.4%) Goldman Sachs raises Ibotta to Buy on compelling valuation and risk/reward (Investing.com)

HIMS (+9.6%) Hims & Hers Health Pops After FDA Allows Compounded Copies Of Eli Lilly's Obesity Drug (IBD)

FLUT (+4.8%) Analysts see buying opportunity following FanDuel parent stock selloff (TipRanks)

DG (-3.3%) Here’s What Dragged Dollar General (DG) in Q3 (Insider Monkey)

OVERHEARD ON THE STREET

CNBC: Delta has suspended hot meal service on several Detroit flights due to a food safety issue at its caterer, with no illnesses reported.

Reuters: NHTSA investigates nearly 36,000 Ford Flex vehicles over rear-camera failures in 2019 models after 23 complaints.

CNBC: Elliott Investment Management, with an 11% stake in Southwest Airlines, seeks a Dec. 10 meeting to oust CEO Bob Jordan and reduce its board slate to eight nominees.

WSJ: Under new CEO Brian Niccol, Starbucks is reducing discounts to enhance operations and focus on premium coffee and seasonal drinks.

CNBC: SpaceX's Starship completed its fifth test flight, successfully catching its booster with the launch tower and splashing down in the Indian Ocean.

TOMORROW’S TRADE IDEA, TODAY

Is This Growth Stock the ‘Nu’ New Thing?

The Bankable Unbanked

Warren Buffet and Cathie Wood follow very different principles when it comes to investing. But the two mega-investors agree on at least one thing: Nu Holdings (NU).

You may not have to squint too hard to see why. The Cayman Islands-based company owns Nubank, which is currently Latin America’s largest fintech bank for under- and un-banked consumers. The firm operates in countries such as Brazil, Colombia, and Mexico.

And, according to Zac Gill of Jennison Associates, it has been one of the best-performing growth stocks globally.

A Nu Kind of Bank

Nu has been growing its profits at breakneck speed, taking advantage of consumers’ increasing preference for digital transactions over cash.

But what really sets it apart, the analyst says, is its willingness to do business with a lower-income consumer base. While most legacy banks in Latin America focus on higher-income customers, Nu has specifically targeted “the little guy.”

This has led to Nu Holdings becoming the banking provider for around half of the adult population of Brazil. Now that it has a large customer base in the country, it is shifting focus to maximizing average revenue per user.

A Solid Entry Point

Nu was profitable for the first time in 2023, and now analysts are projecting a whopping 73% increase in EPS this year, followed by a 43% jump next year. Revenue is projected to rise 30% over the same period.

Gill expects profitability to benefit from the fact that Nu’s major capital expenses, such as investing in software development and hiring risk experts, are well behind it. He believes that this will result in a lower cost of income and ensuing operating profit gains as Nu continues to scale.

The stock is up 60% YTD and is trading at a multiple of 24x forward earnings. While this may seem high, it is well below its triple-digit 5-year average.

Investors may have missed Buffett and Wood’s entry point, but if Gill’s analysis is to be believed, that might not mean they’ve missed the boat.

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ON OUR RADAR

WSJ: Corporate retreats are booming, driving hotel revenues as companies prioritize in-person meetings amid slowing leisure travel.

BI: Gen Z is leading the trend in premium grocery spending, prioritizing health-conscious snacks and beverages over traditional luxuries.

Axios: Lab-grown diamonds now make up 50% of sales as they get cheaper, while spending on larger, natural diamonds continues to rise.

Bloomberg: Economists Acemoglu, Johnson, and Robinson win 2024 Nobel for research on Europe's colonial legacy and its impact on prosperity.

BI: The US economy's "no-landing" scenario could sustain high interest rates and inflation, impacting borrowers and altering business strategies.

FRIDAY’S POLL RESULTS

Which sector do you think will outperform over the next 12 months?

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