StoneCo is Tuesday's selection for IBD 50 Stocks To Watch as shares recently retook their 50-day moving average within a cup-with-handle base. The fintech stock cleared a buy point of 16 last week.
StoneCo's cup with handle is an early-stage base that can net higher gains. Despite a pullback on Tuesday, shares are holding in a 5% buy zone above that entry.
The Brazil-based fintech stock started to rally after its second-quarter report on Aug. 8. The report showed earnings and sales growth accelerated for its June-ended quarter. Earnings grew 46% to 41 cents per share while sales increased 24% to $644.4 million.
During its fiscal first quarter, StoneCo's earnings grew 21% to 33 cents per share and revenue rose 6% to $589.1 million. The accelerating growth is impressive after both earnings and sales growth declined in the fourth quarter of 2024.
For the full year, analysts see profits increasing 39% to $1.61 per share. For 2026, earnings estimates sit at $1.88 per share, or a 17% hike.
StoneCo Stock Soars After Warren Buffett Buys In
StoneCo provides payments software, banking and other services to businesses in Latin America. Its services are available across online, in-store and mobile channels. The stock ranks first in the credit cards and payments group, according to IBD Stock Checkup.
The stock rallied to its all-time high of 95.12 in February 2021 amid a Warren Buffett effect. The seasoned investor's Berkshire Hathaway acquired a stake when shares started trading on the Nasdaq in 2018.
Shares then crashed to an all-time low of 6.81 in May 2022 before recovering. Buffett reportedly sold his shares in 2023.
StoneCo's all-around score sits at 97 while shares have outperformed 92% of other stocks in the Investor's Business Daily database over the past 52 weeks. Earnings growth in the two recent quarters has earned the fintech stock an Earnings Per Share Rating of 96.
Its Up/Down Volume Ratio of 1.3 also shows strong demand for the stock over the past 50 days.
Further, StoneCo has an Accumulation/Distribution Rating of B. That shows funds have been buying StoneCo stock over the past 13 weeks and now own 29% of outstanding shares.
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