Technology Sector Ideas

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StoneCo - >>> Strong growth driven by pandemic lockdowns and an endorsement from Warren Buffett helped shares of StoneCo (STNE 0.22%) rocket up to dizzying heights in early 2021. Buffett's holding company, Berkshire Hathaway, still owns more than 4% of the Brazilian e-commerce company, but the stock has tumbled more than 90% from its previous peak.


https://www.fool.com/investing/2023/03/27/2-stocks-to-buy-before-the-next-nasdaq-bull-market/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


StoneCo offers merchants throughout Brazil increasingly popular financial services such as banking and payment processing. The company also markets a collection of software solutions designed for merchants in Brazil.

According to StoneCo, Brazil's e-commerce industry grew sales by 24.6% in 2022. The stock looks like a buy because the company's share of this market is increasing. It reported a total payment volume figure that grew 33.4% last year.

StoneCo is a well-run business, with revenue expanding much faster than operating expenses. In the fourth quarter, the company reported net income according to generally accepted accounting practices (GAAP) that worked out to 2.9% of total revenue. In the previous year's period, the company reported a steep loss.

Right now, you can buy shares of StoneCo for just 14.9 times the amount of free cash flow its operations generated over the past year. Investors who buy at this modest valuation will come out ahead if the business creeps forward at a single-digit percentage from year to year. With a growing share of Brazil's e-commerce industry, we can reasonably expect this business to exceed the market's low expectations.

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