Latin American e-commerce giant and Cathie Wood holding company MercadoLibre (MELI) is up a whopping 54% from its December lows. That’s more than 35% higher than the S&P 500’s 6% return so far this year. Amazon.nl (AMZN) is up 18% from December lows.
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MercadoLibre – today’s pick of IBD 50 stocks to watch – climbed above a base-on-base pattern with a buy point of 1,250.58 on Monday. Volume was moderately above average, while the relative strength line is at a 52-week high.
MercadoLibre is a much smaller company. It has a market cap of $63 billion compared to Amazon’s $985 billion. But the e-commerce game is reported to have 667.7 million monthly visitors compared to Amazon’s 169 million monthly visitors.
The volume was strong as MELI built the right side of the formation’s second base. MercadoLibre is also an IBD Leaderboard stock.
The growth stock has a perfect Composite Rating of 99 and a Relative Strength Rating of 95. However, the EPS Rating is less than adequate at 74.
Strong revenue growth is one of the reasons why MercadoLibre is a stock to watch. Retail sales and fintech payments through the Pago feature have skyrocketed. Total sales have grown 41% to 94% over the past seven quarters, though revenues have been uneven.
Revenue grew 41% to $3 billion in the fourth quarter, while earnings per share of $3.28 reversed from a loss a year ago, IBD MarketSmith said. When comparing revenue to market capitalization, MELI appears to have more room to grow than Amazon based on the same comparison.
For the first quarter, analysts polled by FactSet expect revenue of $2.8 billion with earnings of $2.63 per share. Analysts also have an average buy rating on the stock with a price target of $1,423.79.
Growth stocks a major fintech game in Latin America
Growth stock ranks first in the internet retail group, which ranks 28th out of IBD’s 197 industry groups.
MercadoLibre operates online trading platforms for companies and individuals in Latin America.
Mercado Libre Marketplace is an automated online trading platform that allows businesses and individuals to list, sell and buy products online, just like eBay.com (EBAY).
Mercado Pago FinTech is a financial platform that facilitates transactions on the company’s marketplaces and allows users to send and receive payments online. Users can also transfer money through the websites or on the app.
The company also has an investment feature, Mercado Fondo, that allows users to invest in their Mercado Pago accounts. The lending division, Mercado Credito, provides credits and loans to businesses and individuals, while Mercado Envios provides logistics to help sellers use third-party carriers, warehousing services and other logistics services.
The Montevideo, Uruguay-based company also operates an online classified ad, Mercado Libre Classifieds, and an advertising platform, Mercado Libre Ads. It also hosts an online shopping website that allows businesses and individuals to set up and advertise their e-commerce business.
Mutual funds own 53% of the shares, which also have an impressive Accumulation/Distribution Rating of A. Over the past four quarters, more funds have bought the shares. Exchange-traded funds also hold growth stocks. Cathie Wood’s ARK Fintech Innovation ETF (ARKF) and Global X Emerging Markets & ECommerce ETF (EWEB) hold shares of MELI.
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