Latin America e-commerce giant and Cathie Wood holding MercadoLibre (MELI) has climbed a staggering 54% from December lows. That is over 35% higher than the S&P 500’s return of 6% so far this year. Amazon.com (AMZN) has risen 18% by comparison from its December lows.
MercadoLibre — today’s pick for IBD 50 Stocks to Watch — Monday climbed above a base-on-base pattern with a buy point of 1,250.58. Volume was moderately above average, while the relative strength line is at 52-week highs.
MercadoLibre is a much smaller company. It has a $63 billion market cap, compared with Amazon’s $985 billion. But the ecommerce play has 667.7 million monthly visitors compared to Amazon’s 169 million visitors per month, according to reports.
Volume has been strong as MELI built the right side of the second base of the formation. MercadoLibre is also an IBD Leaderboard stock.
The growth stock has a perfect Composite Rating of 99 and a Relative Strength Rating of 95. Its EPS Rating, however, is less than adequate at 74.
Strong top-line growth is one reason MercadoLibre is a stock to watch. Retail sales and fintech payments through its Pago feature have soared. Total sales have grown 41% to 94% over the past seven quarters, although earnings have been uneven.
Sales grew 41% to $3 billion in Q4, while earnings per share of $3.28 showed a turnaround from a loss a year ago, according to IBD MarketSmith. When comparing revenue to market cap, MELI appears to have more room to grow than Amazon based on the same comparison.
For the first quarter, analysts polled by FactSet expect sales 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 Stock A Key Fintech Play In Latin America
The growth stock stands first in the internet retail group, which ranks 28th among IBD’s 197 industry groups.
MercadoLibre runs online commerce platforms for businesses and individuals in Latin America.
Mercado Libre Marketplace is an automated online commerce platform that allows businesses, and individuals to list, sell and buy products online, much like eBay (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. Its loan division, Mercado Credito, extends credit 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 runs an online classified listing, Mercado Libre Classifieds, and an ad platform, Mercado Libre Ads. It also hosts an online store website to allow companies and individuals to set up and advertise their ecommerce business.
Mutual funds own 53% of the stock, which also has an impressive Accumulation/Distribution Rating of A. More funds have been buying the stock over the past four quarters. Exchange traded funds hold the growth stock, too. Cathie Wood’s ARK Fintech Innovation ETF (ARKF) and Global X Emerging Markets & ECommerce ETF (EWEB) hold shares of MELI.
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