Warren Buffett Owns 11.8% of This Recent IPO. Should You?

First, I found the explosive IPO chart formation. Then I discovered Warren Buffett likes it too!

Did you see the IPO I featured last week with this same pattern?

It’s, ZS, and it was up over $10 (20%) on Friday!

This stock could do the same thing

To be clear, I never predict 20% moves in one day, but Stone Co. (STNE) could easily run up 20% quickly and then a lot higher.

STNE is in the hot sector of cloud-based payment processors. It’s like Square (SQ) or PayPal (PYPL). It trades on the NASDAQ exchange, but its business is focused on the Brazilian market.

STNE came public in late October 2018 at $32, and then got swept lower with the bear market.

https://lh6.googleusercontent.com/X2yTQMfPTAWuMYzotSBL8gmUKppSvWXgAA2dTrP7rlGUBx0yTNhEe6qNaag3YJRFkB-peXsQJwxMHdlvBCgTtvvHuEH_IOCFsxGNzbDE82vUjLnoLPC-8ki4-Nu6eP5Q1nnxfkJ_

However, it’s now climbed back up to its IPO price and all-time highs. When an IPO sells off and then recovers to its IPO price, a new high breakout can be the beginning of big move.

STNE has not broken out to new highs yet. It should clear $32.75 before being considered a new high.

The trade setup is to enter over $32.75 with a stop under $29.50.

The ideal situation would be for it to consolidate under $32.50 for a few more days before breaking out, but that may not happen.

If it gaps over $34, I would not chase it. It’s run up from $24 without much of a rest so there is good reason to believe it could consolidate before its next big move.

Most importantly, if it’s trading under $29.50 it’s a risk of a substantial sell-off, so be disciplined in the use of stop loss orders.

Trade smart,

Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation