What happened

Shares of StoneCo (NASDAQ:STNE) rose 39.4% in November, according to data from S&P Global Market Intelligence. The stock climbed thanks to positive coverage from analysts and strong momentum for the broader market last month. 

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StoneCo published better-than-expected third-quarter results at the end of October, and bullish sentiment in the broader market combined with favorable analyst coverage helped the fintech company's momentum continue last month. 

A woman holding a credit card and a mobile phone.

Image source: Getty Images.

So what

Bradesco BBI released a note from analyst Victor Schabbel on Nov. 2, upgrading the firm's rating on the stock from "underperform" to "neutral" and raising the one-year price target on the stock from $42 to $53 per share. Susquehanna's James Friedman then published a note on Nov. 12, maintaining a positive rating on the stock and hiking his price target from $68 to $74 per share.

Now what

StoneCo stock has continued to inch higher in December's trading. The company's share price is up roughly 1% in the month as of this writing.  

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StoneCo's management expects growth for total payment-volume growth on its payment-processing platform to continue accelerating in the fourth quarter, and it looks like the service has a long runway for expansion. The company is also guiding for strong merchant-customer additions in 2021. 

StoneCo stock has posted stellar growth this year, which has had the effect of elevating the company's price-to-sales and price-to-earnings multiples. The company has a market capitalization of roughly $23 billion, and is valued at 36 times this year's expected sales and 121 times expected earnings, reflecting the fact that the company's stock performance will hinge on the business continuing to deliver big growth.

However, the market for payment-processing and enterprise-software services in Brazil and other Latin American markets still has huge room for growth, and the company stands as a top player in these categories. I purchased shares in the company earlier this year and plan on holding for the long term because the company's growth potential looks far from being tapped out.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.