Both the chart pattern & recovering financial performance show that STNE is preparing for a parabolic move.
I was wondering why this Brazilian Fintech Company, which had stunning financial performance in the previous years, nosedived from 90 to 10 in hardly one year.
A decrease of almost 90% - that's scary for every investor. The reason I found is the bad debts - when macroeconomic situation of Brazil worsened people couldn't pay their debts. But now the STNE is recovering on the back surprising quarterly results and whopping estimates about future earnings.
Let's discuss important strengths of STNE:
TECHNICALS:
Stock entered accumulation zone in March 2022 and is swinging between price range of 12 to 7 for the last 7 months. It is forming ascending triangle but still breakout hasn't occurred and Golden Cross is also awaited. Average volume has increased but big spikes which show institutional buying are also not yet witnessed.
FUNDAMENTALS:
Recent quarter has been tremendously good for STNE. Its post quarter income increased 140% and its revenues increased 10%. One surprising aspect about STNE is that its topline growth has never stopped despite negative incomes in many trailing quarters. Company's revenues increased 110% in Trailing Twelve Months (TTM) because of increasing number of customers and inspiring performance of its core payment-processing system. Its earnings estimate of $0.35 per share represents a change of +191.67% from the year-ago number.
Another positive aspect is that Warren Buffet has this stock in his portfolio due to its high risk-reward potential.
Hence, I am keeping this stock in strict monitoring and waiting for breakout and golden cross. Another good quarter of earnings can be real fuel for its market performance.