MercadoLibre Soars 33% in a Year: Should Investors Buy the Stock Now?

MercadoLibre MELI shares have returned 32.9% in the trailing 12-month period, outperforming the Zacks Retail-Wholesale sector and the Zacks Internet-Commerce industry’s growth of 11% and 19.3%, respectively.MELI shares have been riding on its dominant presence in Latin America and a diversified business model across e-commerce and fintech. Operating in 18 countries, it continues to invest heavily in expansion and is actively implementing strategies to mitigate competition and macroeconomic risks.In 2024, MercadoLibre achieved significant milestones, passing 100 million unique buyers on its marketplace and reaching 60 million fintech monthly active users for the first time in its history.1-Year PerformanceImage Source: Zacks Investment ResearchMELI’s Investments in Mexico to Aid Top LineMercadoLibre announced plans to invest $3.4 billion in Mexico in 2025, a 38% increase from last year’s investment. This move is aimed at enhancing its technology, logistics, and fintech operations in the country, which is its second-largest market. The company will also expand its workforce by 10,000 employees, bringing its total to 35,000 in the country.This investment is expected to strengthen MercadoLibre’s top line by driving higher transaction volumes and e-commerce penetration, improving delivery efficiency, and expanding its financial services ecosystem.MELI’s Strategies Against Competition and Macro RisksMercadoLibre has a strong foothold in Latin America's online retail market, but there is rising competitive pressure from e-commerce giant Amazon AMZN, which is making strong efforts to expand its presence in LATAM. MELI also faces strong competition from the retail behemoth Walmart WMT, especially in Mexico.To stay ahead of competitors, MercadoLibre continues to strategically invest in innovation, including those targeting lower-ticket sales. The company has enhanced its user interface with improved filters and category-specific features for beauty and fashion. It is also expanding free shipping for low-cost products while leveraging its CVT system to optimize inventory supply. These efforts have driven low ASP product sales to grow at or above the marketplace average in Brazil and Mexico, reinforcing MercadoLibre’s leadership in the region.MercadoLibre is also strengthening its advertising business to improve competitiveness by strengthening partnerships, enhancing advertising technology and incorporating display, brand, and video advertisements. These efforts are expected to boost monetization, increase engagement and improve product visibility for the company.In the fintech business, MELI faces competition from Rakuten RKUNY, a Japanese technology conglomerate whose businesses include financial services using fintech. It operates in 30 countries, including Brazil, Argentina and Mexico. Despite the competition, MELI has been performing well in the fintech business. In 2024, MELI’s credit portfolio expanded 74% year over year to $6.6 billion, with the credit card segment growing at an impressive 118% compared to the overall portfolio growth of 57%. Assets under management grew 129% to $10.6 billion, driven largely by the success of the company's yielding account. The company is actively managing credit risk amid rising interest rates and macroeconomic uncertainties in Brazil and Mexico. The company has significantly reduced microcard issuance, tightened payback periods and restricted credit expansion in higher-risk segments to ensure stability.MELI’s Earnings Estimate Revisions Show Upward TrendThe Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $7.82 per share, which has been revised upward by 13.9% over the past 30 days, indicating 15.34% year-over-year growth. The consensus mark for 2025 earnings is pegged at $47.50 per share, up 8% over the past 30 days, suggesting 26.03% year-over-year growth.Image Source: Zacks Investment ResearchMercadoLibre’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average surprise being 16.37%Also, MELI's shares are trading above the 50-day and 200-day moving averages, a technical indicator often seen as a bullish signal. This movement suggests a potential continuation of the upward trend.MELI 50-Day and 200-Day Moving AveragesImage Source: Zacks Investment ResearchWhile the stock’s forward 12-month Price/Sales ratio of 3.85 significantly exceeds the Zacks Internet-Commerce industry average of 2.09, this premium valuation reflects investor confidence in the company's growth potential for the rest of 2025.Here’s Why You Should Buy MELI Stock NowMELI plans to make significant investments in Mexico, further strengthening its position in the region. Its strategies against competition and macroeconomic risks ensure sustained growth and market leadership in Latin America. The company also has a strong balance sheet. As of Dec. 31, 2024, cash and cash equivalents were $2.63 billion. Short-term investments were $1.05 billion as of Dec. 31, 2024. The strong liquidity position helps the company expand and pursue strategic initiatives.MercadoLibre plans to double its fulfillment centers in Brazil by the end of 2025 and increase its same-day delivery capabilities by 40%. The company is also targeting lower-risk customers with larger credit lines to expand its market reach. These moves suggest that the company’s long-term growth prospects are strong as it continues to expand its market.MELI currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report MercadoLibre, Inc. (MELI): Free Stock Analysis Report Rakuten, Inc. (RKUNY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks