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Brazilian New Issue Boasts Triple-Digit Earnings And Sales Growth

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After raising $2.3 billion in its initial public offering, IPO LeaderPagSeguro Digital ( PAGS ) is breaking out past an IPO base's buy point. Shares jumped 3% in morning trade, but trimmed some of the day's in midday trading.

[ibd-display-video id=3149216 width=50 float=left autostart=true] The Brazil-based new issue provides payment services for small businesses in Brazil. Comparable to U.S.-based Square ( SQ ), PagSeguro targets smaller merchants by selling its card-processing machines. The company also helps customers manage and grow their business, opening access to customers who would normally not accept credit card payments.

PagSeguro is owned by Brazilian media group Universo Online, which claims to be the largest online content company in Brazil.

According to UBS analysts, PagSeguro holds a 3% market share in Brazil's payment-processing industry.

While the company has yet to report as a publicly traded company, earnings growth surged 250% year over year in the most recent quarter to 14 cents per share. Meanwhile, revenue growth extended its quarterly streak of triple-digit growth to four quarters with a 139% increase vs. the year-ago period.

When the stock debuted on Jan. 24 , it closed at 29.20, over 35% higher than the 21.50 IPO price. Such strong price action shows that institutional demand for the payment processor was heavier than expected.

Since that time, the stock has mostly traded calmly and quietly, falling just 10% during its base formation. Early Friday, the stock advanced above the 30.02 buy point, resulting in the stock being added to Leaderboard .

Check out the stock's relative strength line - the blue line painted on each IBD Chart and MarketSmith daily and weekly chart. It illustrates performance vs. the general market. The recent issue's RS line has held up well during the recent market correction, even hitting a high, indicating substantial market outperformance.

Now that the general market is back in a confirmed uptrend, look for a strong breakout in heavy volume to indicate further upside is possible.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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