Weekly Update | November 13, 2011
MercadoLibre (NASD:MELI), the dominant Latin American ecommerce firm, keeps growing and proving to global investors that the internet boom is even more powerful in emerging markets.
On Aug. 4, as Europe’s debt woes were starting to make for an unpleasant late summer and early autumn for U.S. investors, I added MercadoLibre to our Model Growth Portfolio (see last page of this edition).
Then, early this month, it paid off big time. MELI’s price exploded to its current level in the mid-80s after its Nov. 2 announcement that earnings per share had vaulted 40% above a year earlier in its fiscal third quarter ended Sept. 30 on a revenue gain of 46% to $81.6 million.
Argentina-domiciled MercadoLibre, the largest online trading platform in Latin America, dominates e-commerce in Argentina,Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela. In addition, it also operates online commerce platforms in the Dominican Republic, Panama and even across the Atlantic in Portugal.
Frequently referred to as the eBay of Latin America, 10 years ago MELI acquired eBay’s Brazilian subsidiary in an exchange for stock that now has the U.S. online-auction giant holding a reported 18.4% share of MELI. The firm is now eBay's exclusive partner for the Latin American region. MELI resembles eBay in that many sales are made using online auctions where the highest bidder gets the item for sale—an appealing model in a region where spirited price negotiations are still very common. However, 80% of items offered over its system are sold at prices fixed by sellers, with the first bidder offering the pre-specified price getting the item. In addition to money orders, credit cards and a person-to-person payment capability, the firm offers “MercadoPago," MELI’s's version of PayPal.
MELI’s strong franchise on a market with nearly double the population of the United States and a rapidly expanding middle class of consumers has investors recently trading its shares at slightly more than 50 times its trailing 12-month net per share and more than 35 times its projected 2012 net of $2.30 per share.
And it not just the middle market that is growing.
Check out the luxury Ferrari F430 4.3 listed in the Brazil version of MercadoLibre.
Read more in the attached weekly update and ...
Happy trading this week!
Rudy
It was another great week in Latin America for stocks including:
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