Company Overview - MercadoLibre (NASDAQ: MELI) is referred to as the "Amazon of Latin America" due to its dominant position in the region's e-commerce and fintech sectors [3] Recent Performance - MercadoLibre's stock recently declined following its November earnings report and concerns about Brazil's economy [3] Investment Opportunity - The recent decline in MercadoLibre's stock price is viewed as a significant investment opportunity, given the company's strong position in Latin America [3] Analyst Background - MMMT Wealth, run by Oliver, focuses on long-term investment strategies with a 3-5 year horizon, leveraging insights from investor calls, financials, and news [2] - Oliver has 5 years of investing experience and 4 years as a CPA, emphasizing thorough research to identify high-quality businesses [2]

Nvidia - Nvidia's stock is down more than 10% from its 2024 highs, making it an attractive buy [1] - The company's revenue grew by 94% year over year in the latest quarter, driven by its top-tier GPUs used for AI model training [1] - Nvidia trades at a P/E ratio of 51, which is not expensive compared to Apple (41) and Microsoft (36), especially considering its higher projected growth [2] - Wall Street analysts project 51% revenue growth for Nvidia in FY 2026 [3] Taiwan Semiconductor - TSMC's revenue rose 36% year over year in Q3, driven by its strong AI business, which is projected to triple this year [4] - Wall Street analysts expect TSMC's revenue to grow about 25% in 2025 [4] - TSMC trades at 31 times trailing earnings, cheaper than Apple and Microsoft, despite faster growth [5] - TSMC is a dominant chip manufacturer for companies like Nvidia and Apple, with the best chip foundries in the business [9] MercadoLibre - MercadoLibre is a Latin American e-commerce giant with a significant presence in fintech, often compared to Amazon combined with PayPal [6] - The company has sustained over 30% growth for a long time, with incredible results for shareholders [11] - MercadoLibre's revenue is projected to grow 24% in 2025, but it has struggled with bad debt in its fintech division, impacting profits [11] - The company trades at 61 times trailing earnings, but its forward P/E ratio of 38 for 2025 is more attractive [12] - MercadoLibre's operating revenue grew 35.27% year over year in the latest quarter, with TTM revenue reaching 18.49 billion [10]

Stock Performance - MercadoLibre Inc's stock experienced a significant drop following its earnings release in early November [1] - The stock recovered within three weeks but has since declined again to levels similar to those seen after the earnings release [1] Earnings Impact - The earnings release had a notable impact on MercadoLibre Inc's stock price, causing initial volatility [1] - Despite a temporary recovery, the stock has not sustained its upward momentum and has returned to post-earnings levels [1]

Group 1 - The article discusses the current market environment where many popular trading vehicles, such as cryptocurrencies and meme stocks, are not profitable businesses and lack prospects for future profitability [2] - The Cyclical Investor's Club focuses on investment strategies that are sensitive to economic and market cycles while aiming for long-term growth, which helps mitigate the risk of losses without compromising medium and long-term portfolio returns [2] Group 2 - The article emphasizes that past performance is not indicative of future results, and no specific investment recommendations are provided [3]

Core Viewpoint - MercadoLibre has significant growth potential compared to its e-commerce and fintech peers, driven by its established market position in Latin America and the ongoing expansion of the region's digital economy [1][2]. Company Growth - Founded in 1999, MercadoLibre has established a first mover's advantage in Latin America's fragmented e-commerce market by developing reliable logistics networks [3]. - The company operates in 18 countries, with the majority of its revenue generated from Brazil, Mexico, and Argentina [3]. - From 2013 to 2023, MercadoLibre's gross merchandise volume (GMV) grew at a compound annual growth rate (CAGR) of 20%, total payment volume (TPV) at a CAGR of 54%, and total revenue at a CAGR of 41% in USD terms [5]. Fintech Ecosystem - MercadoLibre has integrated its Mercado Pago digital payments platform into its business model, creating a fintech ecosystem that includes credit card services, lending, and cryptocurrency trading [4]. - The platform's stickiness has strengthened the company's competitive position against regional and international rivals [4]. Market Potential - The Latin American e-commerce market is projected to grow at a CAGR of 14.6% from 2024 to 2030, driven by increasing internet penetration and a shift from physical retail [6]. - Approximately 70% of Latin America's population remains unbanked, presenting a substantial opportunity for digital banking services, with the neobanking market expected to grow at a CAGR of 54.8% from 2023 to 2030 [7]. Financial Performance - MercadoLibre achieved profitability in 2021, with net income growing at a CAGR of 244% over the subsequent two years due to improved margins from economies of scale [8]. - Analysts forecast revenue and net income growth at CAGRs of 29% and 48%, respectively, from 2023 to 2026 [10]. Future Projections - If MercadoLibre continues to grow its earnings per share (EPS) at a CAGR of 25% over the next eight years, its stock price could potentially rise from approximately $1,900 to $15,200 [11]. - This growth could increase the company's market capitalization from $96 billion to about $768 billion, although it would still be smaller than Amazon's current valuation of $2.4 trillion [12]. Active User Base - As of the first nine months of 2024, MercadoLibre served 87 million active buyers and 56 million fintech monthly active users, indicating substantial room for growth within Latin America's population of over 660 million [9].

Core Viewpoint - MercadoLibre is viewed as well-positioned for exceptional long-term annual returns that will exceed the S&P 500 in the medium term due to its exposure to high-growth e-commerce [1] Group 1: Company Analysis - The company is recognized for its resilient management and lasting competitive advantages in the technology sector [1] - It is highlighted that the company combines traditional fundamental analysis with modern proprietary tools to identify value-driven growth investments [1] Group 2: Analyst Background - The analyst specializes in the technology sector, with expertise in AI, semiconductors, software, and renewable energy [1] - The analyst's insights are frequently featured as 'Must Reads' on platforms like Seeking Alpha and Forbes, indicating a trusted voice in financial analysis [1]

Core Insights - MercadoLibre's director Emiliano Calemzuk sold 50 shares at $1,984.98 each, totaling $99,249, which represents a 17.36% reduction in his position, raising investor concerns about its implications [1] - Despite the insider sale, MercadoLibre reported strong financial performance with Q3 revenues of $18.5 billion and a gross margin of 52.5%, alongside a 21% year-over-year increase in unique buyers to nearly 61 million [2] - The e-commerce segment showed significant growth with FX-neutral GMV growth of 34% in Brazil and 27% in Mexico, while the fintech division, Mercado Pago, expanded its monthly active users to 56 million, a 35% year-over-year increase [3] - The company is investing heavily in infrastructure, opening six new fulfillment centers, and plans to double its fulfillment centers in Brazil by the end of 2025, increasing same-day delivery capabilities by 40% [4][5] - The Zacks Consensus Estimate for 2024 projects revenues of $20.65 billion, indicating a 42.67% year-over-year growth, with earnings expected to rise by 73.18% to $33.7 per share [8] - MercadoLibre faces competitive pressure from Amazon and Walmart in the Latin American market, which could impact its market position [12] - Current market conditions, including high inflation and recession fears, are creating headwinds for the company, with margins under pressure due to increased investments [13] - The stock's price-to-sales ratio is significantly higher than the industry average, indicating a stretched valuation and potential vulnerability to negative developments [14] Strategic Outlook - The company’s commitment to innovation and market expansion positions it well for sustained growth in the underpenetrated Latin American market, despite recent insider sales and margin compression [16] - Current investors are advised to maintain their positions due to MercadoLibre's strong market leadership and growth metrics, while potential new investors may consider waiting for a more attractive entry point [7][9]

Core Viewpoint - MercadoLibre is positioned as a significant investment opportunity due to its substantial growth potential in the Latin American e-commerce and fintech sectors, despite recent stock price fluctuations [2][16]. Group 1: Company Growth and Market Potential - MercadoLibre's stock has increased over 6,560% since its IPO in 2007, with an initial investment of $15,000 now worth $1 million [1]. - The company has experienced a 33-fold revenue growth over the past decade, with the Latin American e-commerce market projected to grow by 50% in the next four to five years [4][5]. - The e-commerce penetration rate in Latin America is approximately 10 years behind that of the U.S., U.K., and China, indicating significant room for growth [4]. Group 2: Geographic Expansion - Currently, 96% of MercadoLibre's revenue comes from Brazil, Argentina, and Mexico, highlighting the potential for growth in other Latin American countries [7]. - Countries like Chile, Colombia, Peru, and Ecuador have a combined GDP similar to Mexico's but account for less than 5% of MercadoLibre's sales, indicating untapped markets [8][9]. Group 3: Financial Performance - MercadoLibre's return on invested capital (ROIC) has reached 18%, placing it in the top 20% of S&P 500 companies, suggesting strong profitability [10][12]. - The company's high ROIC is expected to persist as it continues to grow its high-margin advertising business and improve efficiencies through its logistics network [12]. Group 4: Valuation Metrics - MercadoLibre is currently trading at a price-to-sales (P/S) ratio of 5.3, which is less than half of its historical average, indicating a potentially attractive valuation [13]. - The company's earnings yield is at its highest consistent level since 2017, further supporting its valuation appeal [15].

Core Viewpoint - The article highlights five stocks that are expected to perform well over the next decade, emphasizing their potential for impressive gains and suggesting that investors consider adding them to their portfolios [2]. Group 1: Stock Performance - Nvidia has a 10-year average annual return of 76.13% and a 15-year average of 49.57% [2] - Netflix shows a 10-year average annual return of 31.05% and a 15-year average of 35.68% [2] - MercadoLibre has a 10-year average annual return of 30.18% and a 15-year average of 28.27% [2] - Meta Platforms has a 10-year average annual return of 22.19% [2] - The SPDR S&P 500 ETF has a 10-year average annual return of 13.10% and a 15-year average of 13.92% [2] Group 2: Nvidia - Nvidia is recognized for its strong performance, particularly in the semiconductor sector, with a commanding 88% market share in graphics cards [3] - The company's forward-looking price-to-earnings (P/E) ratio is 36, which is below its five-year average of 41, indicating it is not overvalued [4] Group 3: Netflix - Netflix has over 280 million streaming paid memberships globally, with a revenue increase of 15% year over year and a 14% growth in subscriber numbers [6] - The stock's recent forward P/E of 34 is close to its five-year average of 36, suggesting reasonable valuation for long-term investors [7] Group 4: MercadoLibre - MercadoLibre operates in 18 countries in Latin America, combining e-commerce and fintech services, and is described as a leading company in these sectors [9] - The stock has a forward P/E of 41, significantly lower than its five-year average of 85, presenting a buying opportunity [9] Group 5: Meta Platforms - Meta Platforms reported a 19% year-over-year revenue growth in the third quarter, despite a recent stock pullback due to anticipated high spending on AI [10] - The company has a vast user base across its platforms, which provides significant monetization opportunities [11]

Core Viewpoint - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [3]. - There is a clear disclaimer regarding the lack of any stock, option, or derivative positions in the companies mentioned, indicating a neutral stance [2]. - The article expresses that past performance does not guarantee future results, reinforcing the need for careful consideration by investors [4].