The Ultimate Buy-and-Hold Stock for the Next 20 Years

Picking a stock to buy and hold for 20 years is a risky proposition, no matter how conservative the stock. A lot can happen in that time, and what may look like an impenetrable competitive advantage in one decade could disappear by the next.

That said, MercadoLibre (NASDAQ: MELI) may just be a stock worth putting in your long-haul buy-and-hold portfolio. Its diverse digital businesses, which thrive on synergies, should make the consumer discretionary stock a winner for at least 20 years.

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The strengths of MercadoLibre

MercadoLibre has combined businesses such as e-commerce, fintech, and logistics into a single operation. These enterprises work both separately and together to capitalize on opportunities.

One common reason why some hesitate to invest in MercadoLibre is that it operates in Latin America, a region often subjected to political and economic turmoil. Still, MercadoLibre is also adept at turning the region's challenges into opportunities.

Because so many people in its core markets lacked access to digital payment options, it chose to form its own fintech business, Mercado Pago. This has given millions of previously unbanked customers a way to participate in the financial system. Additionally, the lack of fulfillment and shipping options in Latin America led the company to create Mercado Envios, a business that brought next-day delivery and other services to the region.

This integrated approach is working. MercadoLibre booked revenue of $19 billion in the first half of 2026, a 50% year-over-year increase. Despite that massive improvement, its net income fell by 13% to $883 million over the same period. This was in part because the company's e-commerce margins shrank as competition increased. It also had to increase its allowance for non-performing loans as its loan book grew dramatically.

However, long-term investors should appreciate that it is foregoing some profits now to grow its business for the long term. Its lower e-commerce margins today will likely lead to less competition later, which should allow it to increase its market share. Also, as it becomes better at evaluating borrowers, its growing loan book will probably benefit the company's bottom line.

Furthermore, MercadoLibre compares well with other e-commerce stocks such as Amazon. MercadoLibre's market cap is about $94 billion, a tiny fraction of Amazon's $2.8 trillion market cap. While there are no guarantees, Amazon's history may hint at MercadoLibre's future as it captures more of its addressable market.

Finally, MercadoLibre now trades at a P/E ratio of 50. During Amazon's growth years, it routinely supported higher valuations than that, suggesting MercadoLibre stock is relatively inexpensive right now. As the company translates its rapid revenue growth into larger net profits, the stock could head significantly higher over the next 20 years.

Will Healy has positions in MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.