MercadoLibre is the IBD Stock Of The Day, as the largest e-commerce company in Latin America continues to gain momentum. MELI stock is hovering near a buy point during the current period of high market volatility.
Based in Buenos Aires, Argentina, MercadoLibre is the largest provider of e-commerce services in Central and South America. It has a big leg up on industry behemoth Amazon.com in its own backyard.
The company operates online commerce and payments in Argentina, Brazil, Mexico, Colombia and other countries in Latin America.
In addition to providing an e-commerce marketplace for buyers and sellers, with 127 million active users, MercadoLibre hosts platforms where users can create online stores.
Its financial business, called Mercado Pago, allows users to make contactless payments, pay utility bills, make peer-to-peer transactions and pay for transportation tickets, among other things. It has more than 40 million users.
MELI Stock Market Action
MELI stock was down for much of Thursday's session but finished in positive ground, edging up 0.4% to close at 1,072.74 on the stock market today. The stock has a buy point of 1,095.44.
It crept just above the buy point Wednesday before erasing gains. The stock is in a lengthy consolidation, trying to form a handle. An alternative buy point appeared at 1,039.49 from the Nov. 15 high, and the stock remains above it.
MercadoLibre stock has gained 19% since the company posted third-quarter earnings on Nov. 3. Its results beat expectations, signaling the company is on track to expand across Latin America while improving profitability.
The company reported revenue of $2.7 billion on a foreign-exchange basis, matching estimates. Revenue jumped 45% from the year-earlier period.
It reported adjusted earnings of $2.56 a share, up 33% and topping estimates of $2.31. Total gross merchandise volume jumped 32% to $8.6 billion in the quarter.
Resilience Amid Macroeconomic Challenges
"Our commerce business continues to show resilience amid macroeconomic challenges and as physical retail fully reopens," MercadoLibre Chief Financial Officer Pedro Arnt said during the company's recent earnings conference call with MELI stock analysts.
According to FactSet, the company will post a profit of $2.37 per share on revenue of $2.96 billion in the fourth quarter. For the year, analysts expect revenue of $10.5 billion, up 48% from the prior year. Further, their estimate for adjusted earnings is $8.74 a share, up 420%.
The company has reported robust and consistent double-digit growth over the past eight quarters.
MELI stock ranks second place in IBD's Retail-Internet industry group. China e-commerce giant Pinduoduo is first. Etsy ranks No. 3, followed by JD.com.
Shares have a healthy Relative Strength Rating at 90, out of a best-possible 99. Its strong Composite Rating of 96 supports the stock's upward movement. Also, MELI stock is a member of the elite IBD 50 growth stock list.
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