Listen to the audio version of this article (generated by artificial intelligence).
Tom Young is here with your Sunday digest.
Last week, I identified three compelling companies to buy:
- Aerofirm (opening)
Our colleagues in Want Smith They have just launched their most advanced AI-powered inventory picking system to date. These three choices are the ones that made the cut Main signals portfoliothe highest conviction stocks of the system at any time.
I hope you understand it.
Since then, the trio has returned 12% on average, fueled by a 40% rally in Arm.
Not bad for one week of trading.
Better yet, one of these choices is Still in Main signals portfolio. This means it’s not too late to buy.
There’s also still time to learn more about TradeSmith’s AI-powered trading system. If you missed it Keith Kaplan Artificial intelligence signals trading event From Wednesday, you still can Watch the full replay – including live demos and trade examples – here.
I’ll be featuring two of the best new stocks in today’s update. And as a bonus, I’ll tell you (at the end) which of the three picks from last week is still one of the Main signals portfolioBest picks…
The “safest” investment.
Wednesday, Main signals portfolio I offered a surprisingly safe bet:
Nu Holdings Limited (no).
This holding company is the parent company of Nubank, the largest digital bank in Brazil. 60% of all Brazilian adults have a bank account, and the company’s expansion into Colombia and Mexico is seeing explosive growth.
There are three main stories to watch.
First, Nubank has an amazing business model. The bank has no physical branches, and its efficiency ratio (a measure of costs) is only 27.9% – much lower than that of Banco Bradesco.BPD(47% and Itau Unibanco Holding SA)Etop) 53%. (In banking, lower efficiency ratios are better.)
This allowed Nubank to offer better rates, resulting in them gaining a huge number of new customers in a short period. The company now serves at least 112 million Brazilians, and its revenues have doubled since 2023. The profits are also incredible. The company is earning returns on equity of 30% (three to four times higher than its competitors), and net income is expected to rise another 40% in fiscal 2026. These higher returns are critical, as they allow the bank to inject capital back into the business and generate more returns.
Second, Nubank has a long growth trajectory. The company is expanding rapidly throughout Latin America, and its success in Mexico shows that it can compete even against established players like BBVA Mexico. In addition, the company currently offers a very limited range of lending products, giving it room to expand into car loans and mortgages in Brazil.
More importantly, the shares are very cheap compared to the growth rates. Shares are down 20% since January, pricing the stock at just 17 times forward earnings. Markets are assuming only two more years of growth, which is very conservative.
Now, it’s important to note that Nu Holdings still owns a bank, which is an inherently risky business. Default rates in Latin America are particularly high, and Nubank’s net debit rate was 9.6% in 2025. It carries a 15.4% provision for loan losses – nearly 10 times higher than a typical US bank.
However, the company has maintained a conservative balance sheet and reminds me a lot of SoFi Technologies Inc. (SOFI) and Dave Company )Dave) – two digital banks in America that have also achieved great success. Many young savers no longer want to pay for physical bank branches they never use, and digital options offer a low-cost solution that traditional banks can’t match.
To me, it’s no surprise that NU falls into TradeSmith’s top stocks portfolio.
“Moonshot” bet.
the Main signals portfolio A more risky choice was also flagged this week:
Rocket Lab Company. (He rode)
Now, conservative investors may want to stay out of this. As its name suggests, Rocket Lab runs a relatively lumpy business, launching things into space. The company lost $200 million last year, and analysts expect further losses until at least 2027.
As Virgin Orbit’s 2023 bankruptcy makes clear, rockets are a tough business.
However, Rocket Lab is more than just a space launch company.
Since 2020, the Los Angeles-based company has made five significant acquisitions that have transformed it from a launch-only company into a broader “space-as-a-service” company that also designs and builds spacecraft components. This includes composite structures, star trackers, solar panels, space batteries, and sometimes a fully assembled satellite. In 2025, Rocket Lab generated twice as many sales from its space systems segment as from launch services.
Now, there are four investment cases that make Rocket Lab so interesting…
1. Proof of business launch (electronic). Unlike many competitors, Rocket Lab has an operational launch company with a long history of success. Its flagship “small launch” service, known as Electron, has 75 successful missions and more than 200 spacecraft deployed in 2025. These launch systems focus on research satellites and weather sensors that are too small for larger rockets like SpaceX’s Falcon 9.
2. Installed systems works. Rocket Lab is a trusted name in satellite production and design. In December 2025, they signed an $816 million contract with the US Space Development Agency to build 18 satellites for the military. These will be part of the Tracking Layer Trance 3 (TRKT3) program, an advanced missile warning program designed to alert the US military of incoming threats. This massive project has helped increase RKLB’s backlog by 73% to $1.85 billion, and should generate more revenue as the company sells additional payloads, components and repairs.
3. Launching new business (Neutron). While Electron is excellent for small satellites, the “medium lift” market is quickly becoming much more important. These are the types of payloads that Starlink and the US military need. In this area, Rocket Lab is making significant progress in the neutron rocket category. Its partially reusable rocket is scheduled to be tested in late 2026 and will provide a compelling alternative to SpaceX’s Falcon 9 rocket. The project was postponed earlier this year, but that appears to be due to a manufacturing defect, rather than a design issue.
4. New business systems. RKLB’s defense exposure is growing right as the US Army has been rearming itself for 21 yearsstreet-Conflict of the century. Earlier this week, the Pentagon proposed a $1.5 trillion defense budget for 2027 (a 42% annual increase) that doubles allocations for the US Space Force to $71.2 billion. It also includes $1.5 billion for a satellite data network. This spending falls squarely in Rocket Lab’s backyard, given the company’s history of building the kind of sensors and materials needed to detect threats and transmit data.
There is also a tactical reason to buy stocks:
SpaceX is going public.
Highly publicized blockbuster listings often result in a stampede of retail investors looking for a piece of the pie. For example, Lucid Group Inc. is listed at $4.4 billion (LCD) In 2021, it created a frenzy in electric vehicle stocks. Robinhood Markets Company (Capture), Beyond Meat Company (link), and Coinbase Global Inc. (currency) made similar waves throughout their lists.
SpaceX’s IPO could create the biggest tsunami yet. Its owner, Elon Musk, is a master at stealing headlines. And while the billionaire is attracting attention for his upcoming IPO — and his attempt to achieve trillionaire status — don’t be surprised if Rocket Lab gets sucked into the frenzy as well.
And one to catch
As promised, here is the selection from last Sunday digest that Main signals portfolio I stuck to this week:
AeroVironment a company. (opening)
According to the system, the drone maker’s shares are still enjoying a significant rally after rising 6%.
Since last Sunday, AeroVironment has announced another $14.6 million production contract with the US Army and said it has successfully demonstrated the LOCUST laser weapons system aboard the aircraft carrier USS. George Bush SrA giant Nimitz-class aircraft carrier. During the live-fire event, the high-powered laser “tracked, engaged and neutralized multiple drones,” according to AeroVironment’s press release.
This achievement confirms that LOCUST LWS is truly platform-agnostic, seamlessly transitioning from land-based fixed and mobile platforms, such as the Joint Light Tactical Vehicle (JLTV) and Infantry Squad Vehicle (ISV), to the dynamic and demanding environment of a maneuvering aircraft carrier.
In plain English, it’s a system the Navy can use on land and at sea, reducing the complexity and training of these anti-drone weapons.
More gains could be on the way. The previously mentioned $1.5 trillion Pentagon budget also included “drone dominance” as well as “supremacy in space” as goals, allocating $53.6 billion to autonomous drone platforms alone.
Again, I encourage you to do so Watch TradeSmith CEO Keith Kaplan’s reboot Artificial intelligence signals trading event If you haven’t done so yet. In it, he explains how the system was put together, how it helps investors turn massive amounts of data into a simple, actionable strategy — and how you can get access to it, too, and start using it for yourself.
Until next week,
Thomas Young, CFA
market analyst, Investor location
