Here's My Best-Performing Stock of 2025 (So Far) — and Why I'd Buy More of It Right Now

However, there are some particularly exciting parts of the business that could help take MercadoLibre to the next level. Just to name a few:

• The credit portfolio is growing rapidly, but is still rather small compared to the opportunity. Credit cards in particular could be a big opportunity, as they make up just $3.3 billion of the credit portfolio today. In Brazil, the company’s biggest market, credit card adoption rates have tripled since 2019 but are still rather low. Brazil has the 26th-highest credit card penetration rate in the world, with the majority of adults not having one. And it has the highest credit card adoption of MercadoLibre’s markets.

• The MELI+ subscription business (similar to Amazon Prime) is still relatively young and was recently revamped to create a more affordable tier.

• Advertising is a massive opportunity to create high-margin revenue. MercadoLibre’s ad revenue grew by 50% year over year in the first quarter, and the company just launched its Mercado Play app for smart TVs, which should greatly expand the available ad inventory.

Despite the massive upside movement, MercadoLibre could still be a great long-term investment from here and doesn’t necessarily look expensive. In fact, with the company’s profitability improvements, MercadoLibre trades for a significantly lower P/E ratio than it did a year ago.

Not only is the stock “cheaper” than it was a year ago, but key growth rates are accelerating. For example, total payment volume growth in the first quarter of 2024 was 35%, eight percentage points slower than it is now, plus profit margins were significantly narrower.

The bottom line is that it would be a mistake to consider MercadoLibre expensive just because it’s near an all-time high. To the contrary, it looks like a significantly better value today in most ways than at most points in the past couple of years.

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Matt Frankel has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.

Here’s My Best-Performing Stock of 2025 (So Far) — and Why I’d Buy More of It Right Now was originally published by The Motley Fool