Best Stock to Buy Right Now: MercadoLibre vs. PDD Holdings

Core Viewpoint - MercadoLibre and PDD are two high-growth e-commerce companies with significant upside potential, but their growth trajectories and market dynamics differ substantially [1]. Company Overview - MercadoLibre operates in 18 Latin American countries, primarily generating revenue from Brazil, Mexico, and Argentina, and has developed its own logistics and digital payment platform, Mercado Pago [2]. - PDD operates solely in China, having phased out its first-party services, and offers an online agricultural platform while owning Temu, a cross-border marketplace [2]. Growth Comparison - From 2018 to 2023, MercadoLibre's revenue grew at a CAGR of 59% in USD, while PDD's revenue rose at a CAGR of 79% in USD, indicating PDD's faster but more volatile growth [3][4]. - MercadoLibre's growth was bolstered by the pandemic, while PDD experienced significant growth in 2019 and 2020, followed by a slowdown due to COVID-19 lockdowns in China [4]. Future Growth Projections - Analysts expect MercadoLibre's revenue to grow at a CAGR of 27% in USD from 2023 to 2026, while PDD's revenue is projected to rise at a CAGR of 36% in RMB [5]. Profitability Analysis - MercadoLibre became profitable in 2021, with net income growing at a CAGR of 244% in USD, while PDD also turned profitable in 2021, with net income growing at a CAGR of 178% in RMB [6]. - Future net income growth is expected to be 49% CAGR in USD for MercadoLibre and 42% CAGR in RMB for PDD from 2023 to 2026 [6]. Valuation Insights - MercadoLibre trades at about 42 times next year's earnings, while PDD trades at approximately 10 times, indicating PDD may be undervalued despite recent warnings of a slowdown [7]. Investment Recommendation - While MercadoLibre has shown strong performance, it may be due for a correction, whereas PDD's lower valuation could present a better buying opportunity for investors willing to accept volatility [8].