Down 38%, Is MercadoLibre Stock a Better Buy than SpaceX and the “Magnificent Seven” Stocks in November?
The “Magnificent Seven” stocks, which include Nvidia, Apple, Amazon, Alphabet, Microsoft, Meta Platforms, and Tesla, offer a certain stability to investors. They are already among the most valuable companies in the world, but they continue to demonstrate growth and potential, which is why the market loves them.
Space Exploration Technologies is not part of the group, although it fits right into the megacap category. Since it’s fairly young, and it has the latest technology, the market expects a lot from it. That’s why it’s worth $1.8 trillion.
But there are plenty of smaller stocks that can offer a lot more to investors. Because they still have so much room to grow, over time, they may perform much better than the megacap stocks.
Consider MercadoLibre (MELI -0.87%). It recently was 38% off its highs, but it has incredible opportunities. Here’s why it could be the better stock to buy in November.
The fabulous performance
MercadoLibre is growing faster than all of the Magnificent Seven. It’s not growing as fast as SpaceX, but MercadoLibre is a lot cheaper, which is why it has more room to grow.
Image source: Getty Images.
In the second quarter, revenue increased 50% year over year, its fastest rate in almost four years. That’s on a higher base and during a challenging time for the economy, with high inflation in many of the 18 countries it serves.
Gross merchandise volume increased 44% year over year, and MercadoLibre ships 78% of shipments (besides the ones customers choose to be slow) within 48 hours. Unique active buyers increased 26%.
Total payment volume increased 56% year over year. Assets under management were up 68%, and monthly active users were up 30%.
The enticing opportunity
Latin America lags behind other global regions in both e-commerce penetration and digital finance, giving MercadoLibre years of growth potential. And the company sees its ecosystem as its path toward reaching it.
Management says that the dual commerce and finance platform “creates a flywheel in which each makes the other stronger, and why deepening engagement is what accelerates that flywheel into a durable competitive advantage.”
It measures this flywheel in engagement, which you can see in many of its metrics. Items per buy increased 14% year over year in Q2, and the ratio of daily active buyers to monthly active buyers reached its highest level ever, for example.
Why is MercadoLibre stock down?
Profitability has been under pressure over the past two quarters as management invests for the future. It’s not unlike the backlash to artificial intelligence (AI) stocks as those companies build out to capture the immense opportunity.
MELI – MercadoLibre
$1,662.16-$14.63 (-0.87%)
NASDAQ · As of 4:00 PM ET 11/03/26
For MercadoLibre, though, the stakes aren’t quite as high. For starters, it isn’t investing in a new technology but in improving its business and capturing market share.
In Brazil, for example, MercadoLibre lowered its free shipping threshold from R$79 to R$19. That means it’s paying more in shipping costs. Brazil, however, is its largest market. Capturing share puts the company into an excellent position for the future. “We believe investing boldly today is the right response to seize” the long-term opportunity, management said.
The long-term opportunity indeed looks bright, and MercadoLibre is an excellent stock pick right now.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.