12 Best Software Stocks to Buy According to Analysts

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5. StoneCo Ltd. (NASDAQ:STNE)

Stock Price: $8.74

Number of Hedge Fund Holders: 22

Analyst Upside Potential: 73.38%

StoneCo Ltd. (NASDAQ:STNE) specializes in financial technology and software solutions that help small and medium-sized businesses manage their payments effectively. Its financial solutions include point-of-sale systems, online payment gateways, digital banking, and credit solutions. Its software solutions include customer relationship management and enterprise resource planning solutions making it a comprehensive partner for businesses.

In 2024, they plunged 52.02% due to the mishap of unreliable government data usage for client creditworthiness assessment. However, regardless of the decline in stock price the company demonstrated progress towards its strategic goals and maintained its market position. During the fiscal third quarter of 2024, StoneCo Ltd. (NASDAQ:STNE) achieved a record take rate for Micro, Small, and Medium Businesses (MSMBs) of 2.58%. As a result its Total Payment Value for MSMBs for the third quarter also increased by 23% on a year-to-date basis.

The investment case for the company remains strong as it operates in the emerging market of Brazil which is on its way to becoming cashless due to booming mobile technology. According to DigitalPortal Brazil 2024 report more than 210 million cellular connections occurred last year indicating the strong adoption of mobile technology.

Ave Maria World Equity Fund stated the following regarding StoneCo Ltd. (NASDAQ:STNE) in its fourth quarter 2023 investor letter:

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.”

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