The Ultimate Growth Stock to Buy With $1,000 Right Now

Key Points

• Much of Amazon’s massive success can be attributed to being in the right place at the right time.

• A similar company is now in the same situation Amazon was in years ago. It’s just located in a different part of the world.

• Unlike North America, Latin America’s smartphone and broadband revolutions are still moving at a frenzied pace.

Do you ever wish you could go back and buy Amazon (NASDAQ: AMZN) right at its initial public offering? After all, it's only the market's most rewarding stock of the modern era, up nearly 300,000% from its 1997 IPO.

Well, you can't -- the past is in the past.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

What you can do, however, is find stocks in a situation similar to Amazon's 25 years ago. That is, being in the right place at the right time with the right product that most everybody underestimated in its infancy. And one company that's eerily close now to where Amazon was then is MercadoLibre (NASDAQ: MELI).

Here's why it's one of the top growth stocks you might want to consider buying if you've got $1,000 -- or any other amount of idle money -- to commit to a long-term trade at this time.

Image source: Getty Images.

Mercadowhat?

Don't sweat it if you've never heard of it. Plenty of people haven't. That's because the company is headquartered in Uruguay, after being founded in Argentina, near the markets it serves most. In fact, it only operates in Latin America. Brazil is its single biggest market.

Great, but what does it do? MercadoLibre is usually categorized as an e-commerce company, which is a fitting and fair description. In fact, it's often referred to as the Amazon of Latin America.

That description doesn't actually do MercadoLibre justice, though. It's so much more. It operates a digital payments platform, but it also offers delivery and logistics solutions, provides a range of business management and banking solutions, and helps online sellers optimize their digital advertising efforts. Its tech helped facilitate the sale of $51.5 billion worth of goods and services last year, and it processed nearly $200 billion worth of digital payments. MercadoLibre generated nearly $20.8 billion of its own revenue last year as well, up 37% year over year.

Oh, the company's profitable too, and increasingly so.

Data source: StockAnalysis.com. Chart by author.

And yet, that's not quite the crux of the bullish argument here.

The bull case for MercadoLibre is strong

In many ways, where North America's telecom technology was around the turn of this century is where South America's is now. And that's a pretty big deal.

Think about it. Amazon's online mall was launched when dial-up internet was still the norm, and smartphones were anything but. Although Amazon would have probably grown into a respectably sized digital selling platform even without these innovations, super-fast internet speeds and the convenience of a mini-mobile computer certainly played a critical role in Amazon becoming the juggernaut it is today.

Well, that's largely where Latin America is now. Although these technologies have long been available there, they're only becoming commonplace now. Market research firm Canalys reports that -- well after North America reached a comparable peak -- smartphone shipments to Latin America hit a record-breaking 137 million units just last year. In a similar vein, whereas broadband connectivity has been the norm within the U.S. for years now, it's still becoming the norm in Latin America. Market research firm Omdia reports that only about two-thirds of Latin America's residents have access to broadband connectivity, while only a little over half of those consumers actually subscribe to a high-speed internet service.

They're getting on board now, however.

The only real difference between here and there is that Latin America is shaping up as a "mobile first" market, meaning most consumers' primary (and sometimes only) access to the internet is through their mobile devices.

The end result is still the same -- buyers and sellers will always eventually find the easiest path to one another. In this vein, Americas Market Intelligence's PCMI believes the region's e-commerce market will grow to the tune of 21% this year, and double in size between 2023 and 2027. With so many different kinds of exposure to the business (online shopping websites, payments, business support, etc.), MercadoLibre is apt to capture at least its fair share of this growth. Indeed, it stands ready to win more than its fair share.

See, for all the e-commerce growth we've already seen in Latin America and all we're about to see, the market is still highly fragmented. The company only controls about one-third of Brazil's and Mexico's online shopping markets, and a similar proportion for the entirety of Latin America. The region is ripe for a dominant company to take commanding control, much like Amazon did in North America. It's possible that MercadoLibre could win more share there than Amazon enjoys here, in fact.

The kicker: Despite the stock's persistent strength since 2022's low, it's still trading well below analysts' consensus price target of $2,895.82. The vast majority of those analysts also currently rate MELI as a strong buy, suggesting they see something that most investors don't see ... yet.

There is (much) more to like than not about MercadoLibre

Downsides? Sure. Every stock's got them, and this one is no exception. One could balk at MELI's relatively frothy forward-looking price-to-earnings ratio of right around 50, for instance, or its above-average volatility.

On balance, though, the risk and reward here isn't particularly well-balanced -- the upsides far outweigh the downsides, and the stock's frothy valuation isn't anything unusual for a company consistently growing its top and bottom lines at a pace of 25% to 30%.

Bottom line? Don't overthink this one. Also, don't ignore it simply because it's not a familiar or local name that doesn't do business in the U.S. It really is the Amazon of Latin America in several different -- and bullish -- ways.

Or if nothing else, MercadoLibre would be a brilliant way to add some international exposure to your portfolio that circumvents the majority of the political and trade turmoil surrounding the United States at this time. That alone might be worth its fairly steep price.

Should you invest $1,000 in MercadoLibre right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley 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.