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MercadoLibre (MELI) is approaching a buy point of 1,095.44 in a long consolidation. Shares of the ‘Amazon of Latin America’ have been on an eight-day winning streak with rising volume.
The e-commerce and digital payments giant topped an alternative entry of 1,039.49 Friday. They are executing a healthy pullback Monday after a strong run up.
MELI’s Relative Strength Rating has risen sharply from a year ago and stands tall at 92. The strong Composite Rating of 97 supports the stock’s upward movement.
The RS line confirms technical strength, hitting a 52-week high, indicating superior performance compared with the S&P 500.
MELI stock is also a member of the elite growth IBD 50 stock list.
MELI ranks third in the Retail-Internet group, which holds 42nd place among IBD’s 197 industry groups. In addition to MELI, China e-commerce giants Pinduoduo (PDD) and JD (JD) are in the group.
The Buenos Aires, Argentina, company operates online commerce and payments in Argentina, Brazil, Mexico, Colombia and other countries in Latin America.
Founded by Stanford Business School graduate Marcos Galperin in August 1999, the Amazon of Latin America now has more than 300 million registered users. Since then, the company has grown from a secondhand marketplace into a leading online marketplace and fintech service provider.
It offers six integrated e-commerce services: MercadoLibre Marketplace, MercadoLibre Advertising program, MercadoLibre Classifieds Service, MercadoShops online stores solution, MercadoPago payments solution, and Mercado Envios shipping service.
Third-quarter sales of $2.69 billion grew 45% while earnings of $2.56 per share rose 33%. Commerce revenue surged 33% from the previous year while fintech revenue powered 115% higher. Sales have enjoyed robust and consistent double-digit growth over 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.
According to reports, Latin America has a significantly lower percentage of adults with bank accounts, compared to North America. Mercadolibre’s payment services allow these users to access financial services.
MELI’s payment systems have bifurcated into online digital payments, and offline payments through Gateway cross-border features, mobile, merchant credit, and credit and debit cards.
Unique fintech users have grown 32% year over year, crossing the 40 million mark in the third quarter.
In December, the company partnered with WhatsApp for payment processing. Users will be able access an in-app directory to make payments using credit or debit cards.
Mutual funds own 55% of outstanding shares of MELI. The stock’s Accumulation/Distribution Rating of B+ shows strong interest from institutional investors.
More funds have been buying shares of MELI over the past four quarters. Among ETFs, Global X MSCI Argentina ETF (ARGT) and Cathie Wood’s Ark Fintech Innovation ETF (ARKF) hold shares.
Please follow VRamakrishnan @IBD_VRamakrishnan for more news on growth stocks.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
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