StoneCo: A Rare Buying Opportunity (Rating Upgrade)

Jan. 16, 2025 7:41 AM ETStoneCo Ltd. (STNE) StockPAGS, STNE9 Comments

Summary

  • I upgrade StoneCo stock to "Strong Buy" due to extreme market fears, strong business metrics, and attractive valuation on a forward basis.
  • Despite macro issues in Brazil, StoneCo's MSMB segment shows robust growth, with significant YoY increases in revenue, TPV, EBIT, and net income.
  • STNE trades at a 31% discount to the broader Brazilian market, offering a compelling 3-year CAGR of EPS, making it too cheap to ignore.
  • Risks include potential overestimation of EPS/revenue and the unpredictable impact of Brazil's interest rate environment, but I believe in StoneCo's recovery potential.
  • I do much more than just articles at Beyond the Wall Investing: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Fintech Concept - Data Towers On White background.

MicroStockHub

Intro & Thesis

I initiated my coverage of StoneCo Ltd. (NASDAQ:STNE) in August 2023 with a "Buy" rating, highlighting at the time that STNE's forward 26x in earnings seemed like a solid foundation for future stock growth amid the

Hold On! Can't find the equity research you've been looking for?

Now you can get access to the latest and highest-quality analysis of recent Wall Street buying and selling ideas with just one subscription to Beyond the Wall Investing! There is a free trial and a special discount of 10% for you. Join us today!

This article was written by

12.98K Followers
Daniel Sereda is chief investment analyst at a family office whose investments span continents and diverse asset classes. This requires him to navigate through a plethora of information on a daily basis. His expertise is in filtering this wealth of data to extract the most critical ideas. He runs the investing group Beyond the Wall Investing in which he provides access to the same information that institutional market participants prioritize in their analysis. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of STNE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About STNE Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on STNE

Related Stocks

SymbolLast Price% Chg
STNE
--