STNE - Why StoneCo Stock Still Remains The Ultimate Buy Before Q1 Earnings Release

2024-05-11 08:34:13 ET

Summary

• StoneCo Ltd. stock has experienced a decline over the past quarter, but I believe it remains the ultimate "Buy" from both a fundamental and technical perspective.
• The Brazilian stock market is currently severely undervalued, presenting an opportunity for investors.
• StoneCo's Q4 2023 financial results demonstrate consistent growth and operational momentum, with increasing margins and profitability.
• Despite potential first-quarter results falling short, the company's strong long-term targets exceed Wall Street expectations, offering a solid foundation for future outperformance, maintaining my optimism for the long term.

My Thesis

Imagine a typical financial analyst who confidently endorses a particular investment. After initial conviction, it's disappointing for that analyst to see their recommendations eventually falter. Such was the case with my StoneCo Ltd. ( STNE ) bullish call - the stock plunged over 7% over the past quarter (since I initiated coverage of the stock here on Seeking Alpha), while the S&P 500 index grew only 6%:

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