This Stock Is Known as the "Amazon of Latin America," and It's Trading Near Its 52-Week Low
Key Points
MercadoLibre has a broad presence in Latin America and operates in 18 countries.
Its growth rate has been impressive and came in at 49% last quarter.
The stock's valuation may not look all that expensive when factoring in its future growth potential.
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Amazon (NASDAQ: AMZN) has been a growth beast for decades. Today, it's one of the most valuable companies in the world, continuing to look for new growth opportunities and ways to become even bigger. Like many investors, however, you may feel you've missed the boat on the tech giant and that it's too late to buy it.
But what about investing in a company that's so much like Amazon that it's often compared to it? MercadoLibre (NASDAQ: MELI) is based in Uruguay and is often referred to as the "Amazon of Latin America" due to its burgeoning e-commerce business. Its market cap of $80 billion is relatively small when compared to Amazon's $2.8 trillion valuation.
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This year, MercadoLibre's stock is down 21%, and it's now near its 52-week low. Could this be a great time to add it to your portfolio?
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The company has been a growth machine
MercadoLibre's growth has been impressive in recent years, which is why it's unsurprising to hear it get compared to Amazon. Over the past three years, its growth rate has routinely been north of 35%. Its core operations are in Brazil, Argentina, and Mexico. However, MercadoLibre's e-commerce platform operates in a total of 18 countries, giving it plenty of room to grow further in the future.
MELI Revenue (Quarterly YoY Growth) data by YCharts
Unfortunately, with geopolitical issues and tariffs weighing on international markets, growth investors haven't been terribly bullish on the stock of late, despite its consistently strong growth. In the past 12 months, the stock has declined by close to 40% and is now trading near its 52-week low of $1,495.
Has MercadoLibre stock become a no-brainer buy?
The sell-off in MercadoLibre's stock means that it's now trading at around 42 times its trailing earnings. Just like the Amazon of old, it's been commanding a high earnings multiple for the stellar growth opportunities its business possesses. But based on analyst projections, a case can be made that the stock is actually cheap. MercadoLibre trades at a price-to-earnings-growth (PEG) multiple of less than one, which is the cutoff between whether a stock is considered expensive or not based on this metric. The PEG ratio factors in a company's projected growth over the next five years.
But regardless of just how much growth MercadoLibre amasses in the coming years, it's clear that it has established itself as a leading e-commerce player in Latin America. And with its growth rate remaining high and with plenty more growth opportunities on the horizon, this can be a great stock to buy and hold.
Should you buy stock in MercadoLibre right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.
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