2 Millionaire-Maker Technology Stocks

While the world is enamored with artificial intelligence (AI), it has soured on the e-commerce landscape. Many leading e-commerce companies, like Amazon, have underperformed the market in recent years, even as they have other subsidiaries that will benefit from the AI revolution. These were the darlings of the stock market during the COVID-19 pandemic but have since been forgotten by Wall Street.

Two international technology and e-commerce stocks -- Coupang (NYSE: CPNG) and MercadoLibre (NASDAQ: MELI) -- are down significantly from all-time highs, even though they hold leading positions in their key geographies and have significant growth opportunities. Here's why both can be millionaire-maker technology stocks for your portfolio today.

Coupang's discounted opportunity

A technology stock focused on e-commerce is Coupang, headquartered in the United States but primarily operating in South Korea. Coupang offers an Amazon-like online shopping experience for its customers, with a wide selection and rapid delivery times for subscribers to its premium tier.

For years, Coupang has gained market share in South Korean e-commerce, with revenue up 151% in U.S. dollars over the last five years. At the same time, the company is making inroads into new product offerings, such as food delivery, Taiwan e-commerce, and luxury fashion shopping, and is also investing in advertising and financial technology.

Still, the stock is down 63% from all-time highs set at the time of its initial public offering (IPO) in 2021. In recent months, shares have been hurting because of a customer data breach, which has the South Korean government and some customers up in arms. Revenue growth has slowed because of this data breach, rising 14% year over year in constant currency last quarter, but management said growth fell to 4% in January of this year.

This looks like a short-term blip in the company's trajectory, with management saying growth began to recover in February and that the data leak is behind them. Right now, Coupang trades at a market cap of $34 billion, which is roughly equal to its annual revenue. Over the long term, market share gains and new product growth should enable Coupang to keep compounding its revenue and, along with margin expansion, drive significant profit gains as well.

Wall Street is heavily discounting Coupang's stock right now, with its market cap below its total revenue. That makes it a potential millionaire maker for any investor who buys today.

Image source: Getty Images.

MercadoLibre's big push

Investors are also becoming increasingly pessimistic on MercadoLibre, a leading e-commerce and financial technology player in Latin America. It operates in most large countries in Central and South America, with the most important being Mexico, Brazil, and Argentina.

There are fears of margin compression as the company reinvests to improve delivery speeds and the customer experience, which is vastly more difficult than at Coupang due to MercadoLibre's geographic reach across Latin America (as opposed to a small peninsula). This is impacting short-term profit margins but should lead to even more market share gains for the platform, setting it up for long-term success.

You can see this dynamic play out in MercadoLibre's financial performance. In constant-currency terms, revenue grew 37% in Brazil, 41% in Mexico, and 77% in Argentina last quarter. Financial technology revenue grew 61%, making the banking/payments business one of the fastest-growing in the world.

And yet MercadoLibre's profit margin is compressing, with operating margin down to 11% over the last 12 months. But in the long term, the company's scale in e-commerce, growing advertising revenue, and the high-margin fintech business should deliver much higher profit margins.

Today, MercadoLibre trades at a price-to-earnings ratio (P/E) of 41, which looks reasonable for a company growing revenue so quickly. However, if we assume its long-term profit margin can climb to 20% or higher, the stock looks very cheap for investors with a time horizon of more than a year. MercadoLibre's revenue over the last 12 months was $29 billion. If that can grow to $60 billion over the next five years, a 20% profit margin would mean $12 billion in earnings compared to a current market cap of $83 billion, or a P/E ratio of 7.

That looks like a dirt cheap valuation, making MercadoLibre a potential millionaire maker for investors who buy right now.

Brett Schafer has positions in Coupang. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool recommends Coupang. The Motley Fool has a disclosure policy.