HomeBusinessThe ultimate growth share to buy now with €3,000

The ultimate growth share to buy now with €3,000

MercadoLibre (NASDAQ: MELI) may not be a household name where you live. But that’s probably just because you don’t live where it operates. If you were a resident of South America, you definitely would have heard of it. There is even a good chance that you are a customer. After all, it often becomes the Amazon (NASDAQ: AMZN) of Latin America, especially since it has such a ubiquitous, Amazon-like presence there.

However, just because you aren’t a resident of the geographic market doesn’t mean you can’t tap into the growth potential. Investors outside of South America may want to jump on this growth stock, if only to add some regional diversification to their portfolio. Of course, it doesn’t hurt that MercadoLibre stock also brings with it some Amazon-like potential of its own.

To be the Amazon of Latin America at just the right time

The comparison with Amazon is fair, even if it is demonstrably incomplete. MercadoLibre is also a payment intermediary and an e-commerce/online auction platform. It is equally accurate to say that the company is related to both PayPal (NASDAQ:PYPL) And eBay (NASDAQ: eBay).

Whatever it is, it works. MercadoLibre’s first quarter sales rose 36% year over year, continuing a long streak of comparable growth. Last fiscal year’s revenue of $4.2 billion was more than 40% better than the previous year’s revenue.

MercadoLibre's sales and revenue are expected to continue to grow at least through 2026.

Data source: StockAnalysis.com. Chart by author.

What gives? How can this company grow so well in such a challenging economic environment?

In many ways (though not each In Latin America, North America is a few decades ago.

See also  Nvidia shares are down 5% since their peak. These 2 chip players have done worse.

The rapid proliferation of internet-enabled smartphones that is currently underway is one of these ways. Figures from market research firm Canalys indicate smartphone shipments to the region rose 26% to 34.9 million in the first quarter, marking the third consecutive quarter of double-digit growth after a prolonged pandemic-induced lull.

And yet there is still much more room for further growth in the number of smartphone users on the continent. GSMA suggests that only 72% of Latin American residents own a mobile phone, while only 65% ​​of this population uses mobile internet service. However, there are more on the way. GSMA believes mobile internet penetration in South America will rise to 72% by 2030, when more than half of these connections will be super-fast 5G connections.

As in other parts of the world, online shopping follows the advent of wider access to the Internet. Market research firm Americas Market Intelligence says the Latin American e-commerce industry will grow to 24% this year, and will grow another 21% next year and another 21% the year after that.

Why MercadoLibre is crushing it

MercadoLibre is not the only way to tap into this growth. However, it is undoubtedly the best way.

The company is not active everywhere in South America, but does do business in 18 countries and Mexico. It mainly offers its services in densely populated Latin American countries, including Argentina, Colombia and Brazil. Although its market share varies widely from one country to another, the company has more regular users of its services in the region than any of its rivals.

How has MercadoLibre done so well in such a highly fragmented and highly competitive economic environment? By carrying out the seemingly impossible task of being (proverbially) all things to all people.

See also  Donald Trump's Fed takeover proposal receives support from real estate magnate Grant Cardone: 'I like it'

Yes, it is similar to eBay. Please note that eBay is not solely an auction site. Many sellers operate online stores using eBay’s ‘buy it now’ option, just as they can with MercadoLibre. The company also facilitates standalone shopping carts for merchants who want to manage their own e-commerce website. MercadoLibre even offers logistics services and processes 90% of packages ordered through its platforms.

The reach and penetration of the company’s e-commerce arm is boosted by its surprisingly robust suite of fintech solutions. Look, MercadoLibre is not just a payment intermediary. It facilitates loans, offers its own credit card and provides brick-and-mortar merchants with payment-accepting equipment.

Combine all these different components in one integrated operation. The whole is greater than the sum of its parts. MercadoLibre is a powerful ecosystem that is not only in the right place at the right time, but also capable of keeping all its competitors in check — including Amazon.

Don’t think about it too much with MercadoLibre

Analysts seem to think it’s a winner. Their current consensus price target for MercadoLibre shares is $2,027.22, which is almost 30% above the current share price thanks to the recent lull. Of the 22 analysts covering the company, 17 rate it as a Strong Buy, and none of these professionals consider the stock anything worse than a Hold. The analyst crowd is also calling for an extension of recent revenue and profit growth, at least for the coming years, driven by the maturation of South America’s mobile technology industry.

With or without the optimistic attitude of the analyst community, the MercadoLibre story alone makes MercadoLibre stock an attractive growth prospect.

See also  Why Broadcom Stock Soared Monday

Bottom line: don’t think about it too much. If you have a few thousand dollars and want to get to work, but can’t find anything you like enough (that is, something affordable enough) among the usual growth suspects on the market, like Nvidia or Amazon, MercadoLibre is a great option that most other investors aren’t even aware of. Their lack of awareness only reinforces the depth of your opportunities.

Don’t miss this second chance at a potentially lucrative opportunity

Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.

On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Amazon: If you had invested $1,000 when we doubled in 2010, then you have $20,960!*

  • Apple: If you had invested $1,000 when we doubled in 2008, you would have $39,620!*

  • Netflix: If you had invested $1,000 when we doubled in 2004, you would have $366,195!*

We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.

See 3 “Double Down” Stocks »

*Stock Advisor returns June 11, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Amazon, MercadoLibre, Nvidia, and PayPal. The Motley Fool recommends eBay and recommends the following options: July 2024 short calls of $52.50 on eBay and short June 2024 calls of $67.50 on PayPal. The Motley Fool has a disclosure policy.

The Ultimate Growth Stock You Can Buy Right Now with $3,000 was originally published by The Motley Fool

- Advertisement -
RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments