Buffett has encouraged millions of individuals worldwide to acquire wealth and produced life-changing gains for Berkshire Hathaway investors. Berkshire has several rapid growth stocks, despite its reputation as a bargain investor.
Buffett's advice to buy high-quality growth firms might pay off for long-term investors. Read on to understand why StoneCo (NASDAQ: STNE) stock is a great buy-and-hold investment now.
StoneCo, a Brazilian fintech startup, processes payments and provides other services to SMBs. Any SMB that accepts card or app payments needs sufficient hardware and a processing network.
Brazil is Latin America's most populated and economically powerful nation with 217 million inhabitants. Compared to other countries, card-and-app payments are still new. It's expanding quickly and seems ready for significant expansion as cash loses favor to payments technology and e-commerce grows.
Berkshire Hathaway likely acquired StoneCo shares in 2018 because of the Brazilian payment-processing market's strong long-term growth forecast. Buffett's organization may have identified potential in fintech lending, which lent to SMBs.
StoneCo's credit business has lagged in recent years while its payment-processing business has expanded rapidly. The fintech player used Brazil's national register to assess applicants' creditworthiness, but it was flawed.
StoneCo's credit portfolio had several problematic loans. Selling distressed loans at cellar prices and writing down several caused substantial losses for the corporation. SMBs were temporarily denied fresh credit.
That seems bad, which explains why the company's share price is 82% lower than in February 2021. StoneCo's payment-processing business kept growing, and the company has overcome its credit business challenges and losses. With prior baggage resolved, this Buffett-backed growth stock could produce great returns.