1 Brazilian Stock To Buy and Hold for 10 Years
MercadoLibre (MELI), the Brazilian e-commerce behemoth that’s not just commanding the online marketplace but is also bulldozing its way into fintech and beyond is often dubbed the “Amazon of Latin America,” but this comparison, while flattering, might be a disservice. It may also unfair to label it just a Brazilian company because it features in Argentina and Mexico too.
As you’re about to discover, this Latin American firm has a lot going for it besides analysts fair value consensus estimate that sits at $1,604 per share.
Key Points
- MercadoLibre isn’t just a Brazilian giant but a force in multiple Latin American countries, including Argentina and Mexico.
- One key metric that stands out is the company’s delivery speed. Over half of MercadoLibre’s deliveries are either same-day or next-day, an achievement that notably influences customer satisfaction and referrals.
- While its e-commerce business has received much of the spotlight, MercadoLibre’s fintech segment is the “unsung hero,” having almost doubled in growth compared to last year.
Fintech Is The Unsung Hero
A decade ago Mercadolibre was posting stellar top line numbers but that hasn’t stopped recently. Last year, MELI posted revenues up 49%, which followed 2021 gains of 77.9% and 73.1% gains in 2020.
Quarterly results are scintillating too. Last quarter, GMV soared in Argentina by an astonishing 119% on an annualized basis and up by almost 50% overall. That kind of performance is no accident because over half of the company’s deliveries are same-day or next day, a key performance metric that Amazon discovered moves the needle to boost referrals and repeat-purchases.
With analysts predicting that e-commerce will account for one in every five of all retail sales in Latin America within 3 years, MercadoLibre has a bright future.
As good as the ecommerce has been, the fintech side of the business has flown under the radar and yet delivered incredible growth, up almost 2x versus last year.
Transactions occurring outside the MercadoLibre ecosystem, ballooned by over 129% last quarter. With a range of services from digital wallets to credit cards, MercadoLibre is crafting a fintech ecosystem that’s more integrated and pervasive than anyone could have predicted.
Indeed the company is expanding its credit business, which grew to $3.3 billion last quarter. What makes this segment particularly interesting is its synergistic relationship with MercadoLibre’s other fintech services. Balances in digital wallets and credit card services not only support but also augment the credit business, enabling the company to target high-quality, lower-risk candidates.
As the flywheel spins faster, Mercadolibre further expands its moat.
The Bottom Line
When you piece it all together, what you have is not merely a company that’s growing but one that’s innovating and diversifying at breakneck speed. Each segment, from e-commerce and fintech to credit, doesn’t just exist in a vacuum but instead are part of an integrated operation that feeds into MercadoLibre’s larger ecosystem.
So, as you comb through potential high-growth investment opportunities, MercadoLibre offers a compelling case. It’s a story of a powerhouse that’s not just dominating its traditional market but is also making inroads into new sectors with significant scale opportunities. That makes now as good a time as ever to consider MELI for your watchlist.
