If I Could Only Buy and Hold a Single Stock, This Would Be It.

It's a good thing I haven't limited my investments to a single stock. the best way to achieve long-term wealth is through a properly diversified portfolio of great stocks. However, there are some stocks that truly drive a portfolio, standing out from the 25 or 30 stocks that should comprise it. If I had to choose just one stock that I felt had all the elements I'm looking for and offers the best of all worlds, I would choose MercadoLibre (NASDAQ: MELI).

Incredible performance

The first thing you'd want to see in an excellent stock is excellent performance. If a company has lots of potential but hasn't reached any of it yet, it may turn out to be a great pick, but it's too risky to hold as a single stock.

MercadoLibre has pumped out quarter after quarter of high growth and expanding metrics across its business. It operates an e-commerce marketplace similar to Amazon as well as a growing fintech business, and together, they create quite the powerhouse in Latin American regions.

Some second-quarter highlights: Revenue increased 53% year over year (currency neutral); gross merchandise volume (GMV) was up 37%; and total payment volume was up 61%. Unique active buyers increased 25% over last year, and this is an area of focus for management. The company is working to change the status quo in Latin America, which is still predominantly offline, and it's generating the shift online through offering a better value proposition that includes competitive shipping options and a large assortment of merchandise. It's concentrating some of its efforts in grocery, which has a high repeat-frequency rate and brings customers to its platform. One telling metric in e-commerce is items sold per unique buyers, which increased 5% from last year.

In fintech, it continues to add customers at a rapid pace, and monthly active users were up 30% over last year, the seventh straight quarter of 30% or higher. These customers are also adopting new products at a rapid pace, with the average number of products in the company's three largest regions -- Argentina, Brazil, and Mexico -- up 50% over the past two and a half years. This is leading to a strong, highly engaged, and expanding ecosystem of users and services.

Finally, the company is building a solid credit business in the fintech segment. Assets under management (AUMs) increased 106% over last year's Q2, and the credit portfolio was up 91%. It offers high savings rates on accounts, which it calls the "free shipping'' of this segment, reeling in customers, and it now has the largest money market fund in Argentina. Its aim is to digitize finances in Latin America and benefit from the shift.

A huge opportunity

MercadoLibre is the top e-commerce network in all of the main markets in Latin America. It has 94 million unique customers who buy 7.4 products each quarter on average. But there's still a huge opportunity.

Latin America is still underpenetrated in e-commerce and fintech. It's about a decade behind the U.S. in e-commerce penetration and even further behind China. Third-party analysts project the e-commerce market in Latin American countries to increase 53% from 2023 to 2028, expanding its opportunities.

In fintech, Mexico is about a decade behind Brazil in financial inclusion, and Brazil itself is just breaking out of its traditional four-bank hierarchy with high barriers to entry. Most of the bank accounts that do exist have a low interest rate, providing MercadoLibre with an industry that's ripe for disruption.

Robust profitability

MercadoLibre is still a rapidly growing market, and it's already solidly profitable. In Q2, operating income increased from $725 million to $826 million, although net income was lower due to currency changes and taxes.

Image source: MercadoLibre.

That's important to me in a great stock because it means you can rely on the company to stay viable while it's taking more market share.

A good value

MercadoLibre stock trades at a forward, one-year price-to-earnings ratio of 33. I wouldn't call that cheap, but it's far from astronomical even objectively speaking, and it's reasonable for a stock with as much potential as MercadoLibre. That seals the deal for MercadoLibre for me, a stock that's as close as possible to being everything to every investor.

Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.