MercadoLibre (MELI) is approaching a buy point at 1,095.44 in a long consolidation. Shares in the ‘Amazon of Latin America’ have been on an eight-day winning streak with increasing volume.
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The e-commerce and digital payments giant topped an alternative record of 1,039.49 on Friday. They execute a healthy pullback on Monday after a strong run.
MELI’s Relative Strength Rating has risen significantly from a year ago and stands at a high of 92. The strong Composite Rating of 97 supports the share’s upward movement.
The RS line confirms technical strength and hits a 52-week high, indicating outperformance compared to the S&P 500.
The MELI share is also a member of the elite growth IBD 50 share list.
Amazon in Latin America: MercadoLibre Strong sales and earnings
MELI ranks third in the Retail-Internet group, which ranks 42nd among IBD’s 197 industry groups. In addition to MELI, China e-commerce giants Pin duo duo (PDD) and JD (JD) is in the group.
The Buenos Aires, Argentina company operates online commerce and payments in Argentina, Brazil, Mexico, Colombia and other countries in Latin America.
The Amazon of Latin America was founded by Stanford Business School graduate Marcos Galperin in August 1999 and now has more than 300 million registered users. Since then, the company has grown from a used marketplace to a leading online marketplace and fintech service provider.
It offers six integrated e-commerce services: MercadoLibre Marketplace, MercadoLibre Advertising program, MercadoLibre Classifieds Service, MercadoShop’s online store solution, MercadoPago payment solution and Mercado Envio’s shipping service.
Third-quarter sales of $2.69 billion grew 45%, while earnings of $2.56 per share share rose 33%. Retail revenue was up 33% from the previous year, while fintech revenue was up 115% higher. Sales have enjoyed robust and consistent double-digit growth for the past eight quarters, with one quarter boasting a triple-digit growth spurt.
According to FactSet, the company will post a profit of $2.37 per share on revenue of $2.96 billion in the fourth quarter.
Payments Power MELI Growth
According to reports, Latin America has a significantly lower percentage of adults with bank accounts compared to North America. Mercadolibre’s payment services provide these users with access to financial services.
MELI’s payment systems have divided into online digital payments and offline payments through Gateway cross-border functions, mobile, merchant credit and credit and debit cards.
Unique fintech users have grown 32% year over year and crossed the 40 million mark in the third quarter.
In December, the company partnered with WhatsApp for payment processing. Users will be able to access an in-app folder to make payments using credit or debit cards.
Mutual funds own 55% of outstanding shares in MELI. The stock’s accumulation/distribution rating of B+ shows strong interest from institutional investors.
Several funds have bought shares in MELI over the past four quarters. Among ETFs, the Global X MSCI Argentina ETF (ARGT) and Cathie Wood’s Ark Fintech Innovation ETF (ARKF) own shares.
Please follow VRakrishnan @IBD_VRakrishnan for more growth stock news.
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