Got $1,000? Here Are 3 Growth Stocks to Buy Now
Growth stocks are always an exciting place to invest because they represent companies with strong cash flows, and revenue and earnings that are expected to outpace the industry average. Additionally, with the coronavirus situation now under much better control — albeit with uncertainties remaining — the U.S. economy is now on the mend and in expansion mode, a phase of the cycle that growth stocks tend to do well in.
With that said, we put together a panel of Motley Fool contributors and asked them to identify three great growth stocks to invest $1,000 in. They chose the digital payments processor StoneCo (NASDAQ:STNE), the global software-as-a-service company Workiva (NYSE:WK), and the cryptocurrency bank Silvergate Capital (NYSE:SI). Read on to see why they think these three companies could have further potential ahead.
Image source: Getty Images.
Brazil’s digital payments leader goes on sale
Nicholas Rossolillo (StoneCo): Brazil’s leading digital payments processor, StoneCo — often compared to Square here in the states — is having a rough go of things this year. Shares are down 45% through the first eight months of 2021 and down 10% from a year ago.
Nevertheless, the most recent slide comes following Stone’s second-quarter earnings update. The core business is booming, but the pandemic continues to take a toll on Brazil’s economy. In tandem, Brazil is updating its rules and regulations determining digital payments and issuance of credit to businesses. It’s this digital credit system change that led to an 8% year-over-year decline in Stone’s Q2 revenue to 613 million reais (about $119 million). As a result of changes to how credit is issued in Brazil, and malfunctioning of the new credit registry system, Stone decided to temporarily freeze its credit segment for its merchants. This pause is expected to last three to six months.
The temporary loss in revenue hurts, but Stone’s core payments platform is doing just fine. Total payment volume increased 59% year over year, and revenue excluding the credit division rose 68%. The acquisition of small business software company Linx was also completed in July, further enhancing the long-term growth potential Stone has as it helps get South America’s largest economy up to speed with the digital times.
After the steep tumble in share price, Stone is valued at about 24 times trailing-12-month sales — still a premium price tag, but not totally unreasonable given how fast the company’s primary business is growing and the potential the merger with Linx presents. For investors looking for a company with massive potential but who don’t mind big swings in valuation, Stone is still a top-notch option within the fintech stock universe.
This fintech player is leading an emerging industry
Keith Noonan (Workiva): Publicly traded companies need to abide by precise reporting standards, and Workiva makes it easy to meet those requirements and fulfill other…