By Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Trader
From Cabot Wealth Advisory 4/14/11 Sign up for free Cabot Wealth Advisory e-newsletter
On that note, one name I'm watching closely is MercadoLibre (MELI), also known as the Latin American eBay. (In fact, eBay still owns a chunk of the firm.) The business is very similar to eBay, with online marketplaces in a dozen countries, as well as its own payment system that is growing rapidly. And of course, it also has some advertising revenue, helping to monetize its 32 million unique visitors per month.
The stock actually hasn't been a leader for a while, peaking back in late-September around 77, and then consolidating until mid-March (when the stock was 64). Part of that was due to decelerating growth—earnings, which had been advancing at triple-digit rates, grew "only" 38% in the fourth quarter.
However, estimates call for 25% growth this year and 32% in 2012, and both of those figures are likely conservative. Impressively, the stock has been shot out of a cannon during the past few weeks—lifting to 87 on good volume, and has refused to give up any ground during the market's dip of the past week.
My only rubs with buying MELI here are, first, it's a relatively thinly traded (and historically, a very jumpy) stock. Plus, earnings are likely out the first or second week of May, which is always a risk. And, of course, the market itself, while not in terrible shape, is basically on the fence here.
Even so, the story and price action of MELI is enough for me to put it on my watch list. If you're aggressive, you might try to buy a little on weakness (maybe in the low 80s) and then see how the stock reacts to earnings.
Editor's Note: Mike Cintolo is VP of Investments for Cabot, as well as editor of Cabot Market Letter, a Model Portfolio-based newsletter of the best leading growth stocks in the market. It's been more than four years since Mike took over the Market Letter, and during that time, he's beaten the market by 14.1% annually (up a total of 65% since he first took the reins, compared to a loss of 6% for the S&P 500) thanks to top-notch stock picking and market timing. If you want to own the top leaders in every market cycle, be sure to give Cabot Market Letter a try by clicking HERE.
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Trader
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Trader. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.
By Timothy Lutts, Chiel Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 8/8/10 Sign up for free Cabot Wealth Advisory e-newsletter
eBay is well known as one of the greatest online retailers, a great resource for both institutional and individual buyers and sellers of everything from old baseballs to new cars. Far less well known, and with far greater investment potential, is the eBay of Latin America, MercadoLibre (MELI) (the name means free market).
Paul Goodwin, editor of Cabot China & Emerging Markets Report, recently wrote,
“MercadoLibre is an Argentinean company that provides the same kind of e-commerce transactions as eBay, including fixed-price and auction sales, dedicated marketplaces for cars, boats, planes, real estate and services, and an online payment platform. The company was founded in 1999 and it’s the largest online trading platform in Latin America. It has operations in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Portugal, Uruguay and Venezuela, with recent expansions bringing Costa Rica, the Dominican Republic and Panama into the mix.
"The Marketplace has nearly 43 million registered users and sales are expedited by a very efficient search engine, leading to gross merchandise sales of $2.7 billion in 2009. MercadoPago, the company’s online payment system, processed over three million payments in 2009 and the division contributed 26% of revenues for the year.
"The drivers for future growth are expected to be
1) increasing penetration of Internet access in Latin America as the area’s telecom infrastructure builds out,
2) strong GDP growth in the region, which will increase disposable income for its large population, and
3) the introduction of MercadoShops that offer sellers their own online sales channels, and MercadoClics, a search platform that uses sales of display ads and a program like Google’s AdWords to generate income.”
When Paul recommended the stock, MELI was selling at 64. Now it’s 68.
Editor's Note: If you'd like all of Paul Goodwin's top emerging markets stocks, click here for information on the Cabot China & Emerging Markets Report.
President, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.
By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
For Cabot Wealth Advisory, 1/21/08
One of the stocks we have high hopes for is MercadoLibre (MELI), which we like to call "the eBay of Latin America."
Here's what Cabot Top Ten Weekly Editor Michael Cintolo wrote about MercadoLibre a few weeks ago.
"The company began in Argentina in 1999, and has outlasted and outgrown its competition to emerge as the dominant site in South America. Brazil is the company's top market, supplying 43% of revenues, with Argentina and Mexico supplying smaller amounts. The company is still expanding, with moves into Central America markets, and an eBay-like integration of an electronic payment system is a plus. There's still lots of room for expansion into new markets and for higher online expansion into existing markets (Brazil has just 14% Internet penetration). Even today, revenue growth is accelerating! The potential for MercadoLibre is easy to see, and investors have been pushing the stock up fast. This makes it especially important to play any investment correctly."
I look at the chart and here's what I see.
MELI began trading last August at 18, and got as high as 40 on its second day of trading. In late November, it was still at 40, building a strong base. And in early December, it finally took off, running up to 81 by late December. But this year's downdraft has pulled the stock back down to its old support level. It closed last Friday at 47, and if the market performs as poorly as expected tomorrow, it's likely to fall through 40.
But I'll be watching how it performs relative to the market, and if it does find support, I'll continue to keep an eye on it as we wait for the broad market to regain its strength.
Tronador 4890, 8th Floor
Buenos Aires, C1430DNN Argentina
54 11 5352 8000
|Index Membership: N/A |
Industry: Business Services
Full Time Employees: 1,567
8/8/10 MercadoLibre (MELI): Three Drivers for Future Growth
1/21/08 MercadoLibre (MELI): Investors Pushing the Stock Up Fast