As the bull market makes a comeback, investor sentiment is on the rise, but the gains are not evenly distributed. While certain high-performing stocks, including the “Magnificent Seven,” have reached record highs, numerous others have lagged behind the broader market indexes.
It’s worth noting that not all exceptional performers have garnered significant attention. In this context, investors might consider exploring opportunities in two Latin American stocks that are on the verge of reaching all-time highs.
1. MercadoLibre
MercadoLibre (NASDAQ: MELI) appears to be on an unstoppable trajectory, thriving in the face of regional challenges rather than being hindered by them.
In the e-commerce realm, MercadoLibre is consistently expanding its product range and enhancing its app’s technical capabilities. The company generates additional revenue through advertisements on its widely viewed web platforms, attracting nearly 50,000 new advertisers in 2023 alone.
On the logistics front, the company has achieved an impressive penetration rate of nearly 50%, providing a competitive edge over rivals such as Amazon and Sea Limited.
Mercado Pago, initially conceived as a tool to boost e-commerce sales, has evolved into a flourishing standalone fintech business. Continuously adding small- and medium-sized businesses (SMBs) and enhancing product functionality, it surpassed 50 million active users in the fourth quarter of 2023.
With these advancements, it’s unsurprising that MercadoLibre reported over $14 billion in revenue in 2023, marking a 38% year-over-year increase. This robust performance translated into a 105% surge in net income over the same period, reaching $987 million.
While the price-to-earnings (P/E) ratio of 78 might seem elevated, it positions MercadoLibre just slightly ahead of Amazon’s multiple. Given recent stock pullbacks and ongoing improvements in its competitive advantages, the current juncture appears opportune for investors to consider buying into this dynamic company.
2. Nu Holdings
Nu Holdings (NYSE: NU), the parent company of one of the world’s largest digital banks with the endorsement of Warren Buffett’s Berkshire Hathaway, has garnered attention for its remarkable growth. Boasting nearly 94 million customers, Nu experienced substantial expansion, welcoming over 19 million customers to its platform in 2023.
The company’s success is particularly pronounced in Brazil, where it has made significant strides, capturing the attention of 53% of the country’s adults with at least one account on its platform. As Brazil approaches saturation, Nu Holdings is replicating its triumph in Mexico and Colombia.
Nu’s triumph can be attributed to addressing the dominance of a few major banks in Latin America, leaving significant portions of the population excluded from the banking system. Nu’s mission is to bring more individuals into the system, exemplified by nearly 6 million Brazilians acquiring their first credit card between July 2021 and July 2022.
This inclusive strategy has translated into rapid growth, with 2023 revenue surpassing $8 billion, reflecting a substantial 68% increase from the previous year. Simultaneously, operating expenses decreased, leading to a net income of $1 billion—an impressive turnaround from the $365 million loss in 2022.
While Nu’s stock currently hovers near its 52-week highs, the true value proposition may be underestimated by many investors. With a forward earnings multiple of 27, there is potential for significant expansion in this valuation as more investors grasp the significance of this Warren Buffett-endorsed investment.
