10 Worst Performing Stocks to Buy on the Dip

4) StoneCo Ltd. (NASDAQ:STNE)

Average Upside Potential: 62.00%

% Fall on a YTD Basis: ~35%

Number of Hedge Fund Holdings: 35

StoneCo Ltd. (NASDAQ:STNE) offers financial technology and software solutions to merchants and integrated partners to conduct electronic commerce in Brazil.

On the YTD basis, the company’s stock saw a significant decline as a result of concerns regarding market saturation in the Brazilian payments industry. With the expected slowdown in Total Payment Volume (TPV) growth, it seems that the investors are concerned about the growth prospects of StoneCo Ltd. (NASDAQ:STNE). Also, expected price compression and a decline in operating leverage have impacted the company’s stock price in the recent past. StoneCo Ltd. (NASDAQ:STNE) has been facing challenges in the MSMB Card TPV amidst a competitive environment.

On the other hand, market experts believe that StoneCo Ltd. (NASDAQ:STNE)’s stock is poised for recovery as a result of an increase in its client base in the payments sector. In Q2 2024, the company saw substantial growth in the banking client base and client deposits. It continues to invest in sales to capture the SMB market. Moving forward, its business prospects are expected to be aided by the focus on cross-selling and improving software business initiatives, which should ultimately be reflected in the stock price.

While StoneCo Ltd. (NASDAQ:STNE) continues to see the potential for market consolidation and targets to maximize value from its assets, it remains optimistic about the credit portfolio’s performance and anticipates non-linear growth in disbursements. With the central bank’s roadmap for PIX NFC and the benefits of open banking, StoneCo Ltd. (NASDAQ:STNE) should continue its growth trajectory by broadening its credit offerings.

UBS Group upped its target price on shares of StoneCo Ltd. (NASDAQ:STNE) from $17.00 to $18.00, giving a “Buy” rating on 29th 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.”