The 'Amazon of Latin America' is leading this big global trend
March 19, 2019

From Stansberry Research:

E-commerce and digital payments are two of the biggest global trends right now...

By shopping online, folks can access a massive selection that traditional retail just cannot match. More important is the convenience factor... Customers can place orders from the comfort of their homes, or while they're on the go – with a few clicks on their mobile devices.

Paying digitally goes hand in hand with that... It makes it more convenient. It allows people to pay at stores or online through their mobile devices. But that's not all mobile payments can do... Folks can also use their devices to pay bills or send money to one another.

It's a big reason why Dr. Steve Sjuggerud believes no one will use cash or carry a wallet in the near future. We're already long past "cash only" as acceptable in most places in the U.S.

By investing in massive trends like this, investors can reap huge rewards as they play out... If you can identify the major players, you can simply sit back and ride the wave higher.

That brings us to this week's featured company...

While at the Stanford University's Graduate School of Business in 1999, Marcos Galperin brought an investment opportunity to some Silicon Valley backers. The Argentina native wanted to build a marketplace like eBay (EBAY) for his home country.

Two decades later, that marketplace is now called MercadoLibre (Nasdaq: MELI). The words "mercado libre" translate to "free market" in Spanish. Even eBay liked what it saw... The online-auction company bought a stake worth nearly 20% in the business in 2001.

Today, Galperin's company has grown into a $22 billion e-commerce giant. At Stansberry Research, we like to refer to MercadoLibre as the "Amazon of Latin America"...

Galperin is still at the helm – serving as the company's CEO and the chairman of its board of directors. More important, he has expanded the company's operations across South and Central America – transitioning it into a more Amazon-style business model.

It's now more focused on growth. MercadoLibre's goal now is to grow as fast as possible. To do this, it means taking the company's revenues and using them to expand its user base. And as it adds more users to its base, MercadoLibre will continue to grow its sales.

In 2018, MercadoLibre added more than 55 million registered users. That means the company currently has 267 million users on its marketplace. It is now Latin America's largest e-commerce company. Even better, it's the online leader in all 18 countries in which it operates. And the e-commerce industry in Latin America is just getting started...

You see, Latin America has been slower to accept online shopping than the rest of the world. Online shopping is relatively new, especially in cultures that are used to paying for things after they receive them. For example, in Brazil – Latin America's largest market – e-commerce sales made up just 3% of total retail sales in 2017, according to the latest data.

But that just means there's plenty of room for growth...

By 2020, Latin America's e-commerce sales are expected to grow to $75 billion (from just $45.4 billion in 2017). That's a 65% increase... It's a huge tailwind for sales growth.

And MercadoLibre is growing insanely fast... Over the past five years, the company has averaged sales growth of more than 26%. In 2018, its revenue growth dipped to "only" 18%. Analysts expect that growth rate to jump back up to more than 30% in 2019.

Online shopping isn't all that MercadoLibre does, either. It's creating its own "ecosystems." By doing this, MercadoLibre can keep customers using its platforms...

For example, it recently created its own payment system called MercadoPago. That makes it easier for people to pay for everything from goods... to bills... to each other.

This could be huge – think the "PayPal (PYPL) of Latin America." Hundreds of online retailers across Latin America could rely on MercadoPago to securely process their payments.

It's already gaining traction in Latin America. Last year, MercadoPago more than doubled its total payment volume to $18 billion. This shift in the business model is a critical change...

Users can buy products on MercadoLibre's marketplace and pay for them using MercadoPago. If they do that, MercadoLibre earns the fees from the sale and from processing the payment. By keeping consumers in its ecosystem, MercadoLibre gets paid in two places for what other retailers would only earn in one spot. That's how you take advantage of these global trends.

Usually, this kind of growth isn't sustainable. But as we explained, the e-commerce boom is just getting underway in Latin America. MercadoLibre's business has thrived as this trend has picked up more steam recently... The company recently posted revenue growth of 62% for its most recent quarter. And its gross profit margin was 48% in that period.

Those results were better than expected... MercadoLibre's stock soared 21% after the announcement, reaching a new all-time high. Today, the stock trades at almost $500 per share. That's nearly double its December 24 bottom of roughly $257 per share.

More gains could be ahead...

Sometimes investing is simple.

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