StoneCo is today's selection for IBD 50 Stocks To Watch. A holding of both famed investors Warren Buffett and Cathie Wood, STNE stock has formed a three-weeks-tight formation with an entry at 18.05.
IBD MarketSmith shows the three-weeks pattern started after StoneCo won a license from the Brazilian Central Bank on Nov. 5. The license will allow the company to offer new products, including time deposits, to customers.
STNE stock has a Composite Rating of 92 out of a possible 99, while its EPS Rating stands at 77. Further, the Relative Strength Rating is nearly ideal at 96. The RS Rating has improved from 40 just three months ago.
Sales have ranged between 23% and 255% over the past seven quarters. Earnings have been mixed but grew over the four most recent quarters.
During the third quarter, sales grew 35% to $623.9 million while earnings of 26 cents per share were up 306%. Shares rebounded in strong volume from the 50-day moving average within a cup base after results on Nov. 11.
STNE Stock Rises On Strong Outlook
StoneCo provides software and technology platforms for financial services. The stock is a holding in Warren Buffett's Berkshire Hathaway portfolio. The long-term growth outlook aligns with Buffett's famous buy-and-hold strategy.
STNE stock got another boost in mid-November when the company gave its short and midterm outlook.
Through 2027, the company expects total payment volume in its micromerchant, small- and medium-size business segments to grow 13%. The increase in client deposits and loans is expected to be higher at 26% and 90%, respectively.
Earlier, in the first quarter, the company divested its stake in Banco Inter.
Cathie Wood Holding
Mutual funds own 38% of outstanding shares. The stock has also been getting more interest from fund managers over the recent 13 weeks, as seen in the Accumulation/Distribution Rating of A-.
Several exchange traded funds also hold shares of STNE stock. Among these are Cathie Wood's Ark Fintech Innovation ETF. STNE is the fund's 11th largest holding by market value, according to the latest report.
The iShares Russell 2000 Value ETF also holds shares of the Brazilian fintech.
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