This year’s unprecedented market conditions have highlighted some of the problems with making rigid distinctions between growth stocks and value stocks. 2020 has also highlighted the incredible momentum and market-shaping power of the tech sector.
Despite playing host to many companies with highly growth-dependent valuations, tech has proven more resilient than any other industry amid the uncertainty and volatility created by the coronavirus pandemic. Take a look at the performance of the Nasdaq 100 Technology Sector index compared to the S&P 500 index and the DJIA to put this in perspective:
High-quality tech companies that can shape and benefit from influential trends have the potential to post explosive growth over the long term, and the defensive value that these types of businesses can also add to a portfolio has never been more clear. Here’s why investors seeking stocks that can deliver big growth and thrive through adversity should consider adding StoneCo (NASDAQ:STNE), CrowdStrike Holdings (NASDAQ:CRWD), and Zynga (NASDAQ:ZNGA) to their portfolios.
According to CellPointDigital, 85% of business transactions in Latin America are still conducted with cash, and just 39% of the region’s population has a bank account. The contrast between Latin America’s cash and banking habits compared to those in the U.S. is staggering. 94% of adults in the U.S. have a bank account, according to the Federal Reserve, and only 26% of the country’s transactions last year were made with cash. It’s unlikely that the disparity will remain this stark, however.
StoneCo is a Brazil-based payment-processing company that’s helping drive the growth of card and app-based payments in Latin America, and it looks poised for big growth as more people join banks and take up payment methods other than cash. The company also operates a financing division that provides loans for businesses.
The fintech specialist has been prioritizing growth in its domestic market and posting impressive results, even as the Brazilian economy has been moving through a rough patch. Payment volume on the company’s platform jumped 42% year over year in the first quarter, sales climbed 38.3% in the period, and net income rose 22.6%. Brazil’s sizable population of more than 210 million people and relatively low penetration for payment-processing services suggests plenty of room for long-term growth, and the company could also see big growth in other Latin American countries.
StoneCo is already consistently profitable, and shares look like a strong buy, trading at roughly 71 times this year’s expected earnings.
2. CrowdStrike Holdings