Warren Buffett is known to love bank stocks, but he picks his banks carefully. Bank of America is a longtime holding, although he sold some recently, and he picked up shares of Capital One Financial for the first time this year. Last year he sold out his position in Wells Fargo. And American Express, which has expanded its banking services of late, is one of his largest and longest-held positions.

Nu Holdings (NYSE: NU) is one of Buffett's more curious positions, because it was unprofitable when Berkshire Hathaway invested in it back before it was even a public company, and it sports a premium valuation. But it is a bank stock, with the features that Buffett likes.

Today, it has become net profitable for several quarters, while still pumping out high growth rates and increasing popularity. It's still expensive, but there are many signs of lasting value. The number that stood out among many in another incredible earnings report in the 2023 second quarter was Nu Holdings' increase in average revenue per active customer (ARPAC), and this is the key to why there's so much to be confident about for its future.

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Source Fool.com