Despite the looming threat of President Donald Trump’s tariff program and how it’s going to impact many U.S. companies, the S&P 500 (SNPINDEX: ^GSPC) continues its recovery, and it’s up 14% over the past month.
The index is still down this year, though, and there are still worries. Investors are focused on companies that have features that can withstand the impact of new tariffs, including many top international ones.
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Latin American tech giant MercadoLibre (NASDAQ: MELI) has been a top stock for ages, but it looks even more attractive in this climate. And it continues to stake out new opportunities, roll out new programs to reach them, and rack up sales and profits. It’s easily my favorite stock to buy today. Here’s why.
Image source: Getty Images.
The impressive performance
You could pick out almost any quarter from the past few years, and you’re likely to see the same thing: high sales growth, increasing profits, strong margins, and lots of key performance indicators (KPI) that tell a compelling story.
Let’s pick out the 2025 first quarter, since that’s what’s most relevant right now. Here’s a glimpse of its results, all year over year and currency neutral:
Revenue increased 64%.
Gross merchandise volume increased 40%.
Total payment volume increased 72%.
Credit portfolio increased 75%.
Operating margin expanded from 12.2% to 12.9%.
Company-specific metrics told a deeper side of the story. Unique buyers increased 25% year over year, driving the GMV growth. Items sold per unique buyer has been diluted by the amount of new unique buyers, but it still increased year over year, from 7.2 to 7.4.
Groceries increased 65% year over year, and management is focusing efforts in this area. Everyone needs groceries, and they boost the repeat purchase rate. Having a large portion of this market is expected to result in a strong recurring revenue stream from customers who rely on the platform for these essentials.
The company offers members of Meli+, its membership program, the option of receiving packages on a specific day of the week. This has slowed its same-day shipping rate by choice, but results in stronger margins and profits.
The fintech side of things looks just as sweet. Monthly active users increased 31% year over year in the quarter to more than 61 million, still a small percentage of the overall opportunity. High-frequency users are growing at an even faster pace. Assets under management increased 103%, driving the increase in the total credit portfolio and boosting fintech services engagement.
The incredible opportunity
Management says offline still accounts for the vast majority of retail sales at 85%, and MercadoLibre has 5% of the total retail market. As the dominant player in the industry, it sees massive opportunity as it continues its efforts to bring more people online. Latin America is about a decade behind the U.S. and China in e-commerce penetration, and as it shifts, much of the new business is likely to end up in MercadoLibre’s coffers.
One interesting new program it recently launched is called Mercado Play App. It’s available on smart TVs throughout its enterprise, and viewers can download it for free. It offers 15,000 hours of free content powered by the company’s advertising business, which management says is still a small piece of the region’s digital marketing industry. But it’s growing fast, with a 50% increase in sales in the first quarter. Management sees a huge growth opportunity as it gets into streaming video ads.
It’s a similar story in financial services. The industry is in the process of being disrupted, and in Brazil, for example, one of MercadoLibre’s biggest markets, digital upstarts like MercadoLibre are taking market share away from the legacy banks. Management says it has an edge here due to its full-service app and e-commerce platform, which provide a one-stop shop for varied needs and leads to higher engagement.
As these industries shift to newer technology, MercadoLibre is well positioned to benefit. And there may be newer businesses on the horizon, like a deeper dip into streaming and full banking services. It’s waiting for approval for a bank charter in Mexico, and things could move forward from there.
The attractive price
As you might imagine, MercadoLibre stock jumped after the excellent first-quarter report, and the stock is now up 42% in 2025 alone, crushing the market.
You might also imagine that this is an expensive stock, considering its tech focus and long-term opportunity. But it trades at a forward, one-year P/E ratio of 36, which looks at least reasonable if not a bargain for a high-growth stock, and price-to-free cash flow ratio of only 17, which is quite cheap.
Add in that the risk looks low today since the company has a long, proven track record, lots of cash, and increasing profits, and MercadoLibre stock looks like a no-brainer stock for almost any portfolio.
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Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.
