10 Oversold Growth Stocks to Invest In

5) StoneCo Ltd. (NASDAQ:STNE)

Forward P/E (As of 14 October): 7.49x

% Decline on a YD Basis: ~37%

Number of Hedge Fund Holders: 35

StoneCo Ltd. (NASDAQ:STNE) offers financial technology and software solutions to merchants and integrated partners.

StoneCo Ltd. (NASDAQ:STNE)’s core strength is in its Merchant Services Micro-Business (MSMB) segment. This segment has consistently outpaced industry growth rates. Wall Street believes that the company’s strong market penetration and customer acquisition capabilities continue to support total payment volume (TPV) in this segment. The company’s growth strategy remains multi-faceted, which revolves around focusing on expanding its payment processing capabilities, enhancing credit offerings, and developing its software solutions.

The accelerated adoption of PIX in Brazil offers both challenges and opportunities for StoneCo Ltd. (NASDAQ:STNE). While PIX transactions garner lower fees as compared to traditional payment methods, they provide numerous strategic advantages that the company can leverage. The rise of PIX might lead to an overall increase in electronic transactions. This can expand the total addressable market for StoneCo Ltd. (NASDAQ:STNE)’s services.

The company continues to see the potential for market consolidation and targets to maximize value from its assets. Analysts at UBS Group increased their price objective on the shares of StoneCo Ltd. (NASDAQ:STNE) from $17.00 to $18.00, giving a “Buy” rating on 29^th August.

Investment management company Ave Maria recently released its fourth quarter 2023 investor letter. Here is what the fund said:

“StoneCo Ltd. (NASDAQ:STNE) provides solutions that enable merchants and integrated partners to conduct electronic commerce seamlessly across in-store, online, and mobile channels in Brazil. StoneCo has faced near-term operational challenges because of the pandemic and high levels of inflation in Brazil. The company appears to be moving past these challenges and it appears that the successful integration of the newly acquired software business with its payments business will drive substantial shareholder value longer term.”