Viva MercadoLibre!

By Eric Jackson
RealMoney Contributor
6/24/2010 11:30 AM EDT
Click here for more stories by Eric Jackson

MercadoLibre (MELI - commentary - Trade Now) is the best stock you've never heard of.

For the 5% of you who know anything about it, you probably think of the company as theeBay (EBAY - commentary - Trade Now) of Latin America. There's much more to it, however, and now you can position yourself ahead of the pack.

If you like Internet companies with 35% operating margins that operate as a semi-monopoly in their space, with a 42% top-line quarterly growth rate, then MercadoLibre is for you. Unlike the lumbering giant that eBay has become as it struggles to grow revenues by 8% a quarter, MercadoLibre retains the promise of future growth.

MercardoLibre went public in August, 2007, in the mid-$20s. It rose to nearly $80 by the end of that year before starting a long decline leading up to the heart of the financial crisis. It bottomed at $8.88 on Nov. 21, 2008, before beginning its current ascent. It's now trading at nearly $60 and is up more than 14% year to date.

The company is based in Buenos Aires, Argentina. It has a partnership with eBay to sell in Latin America, including Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela. It recently launched activities in Costa Rica, the Dominican Republic and Panama.

MercadoLibre posted $186 million in revenues last year, puny beside eBay's $9 billion. It also targets a much more geographically limited region, however, you could also argue that Latin America's best days are still ahead of it. Also, Latin America has the highest Internet penetration rate of any major continent. This is a region where the growing middle class will assert itself in the coming decade, and MercadoLibre will be there to capture that growth.

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