Here's an interesting question: If you'd invested a mere $1,000 in shares of MercadoLibre (MELI -1.82%) a decade ago, what would they be worth today? The answer will either thrill or annoy you, depending on whether you've owned the stock for those years: $20,605. That's an annualized growth rate of 35.3%! In comparison, the S&P 500 index averaged 11.7% annually, turning $1,000 into $3,011.
That information is all well and good, but it doesn't really help anyone who owns the stock today or who's thinking of becoming an investor in MercadoLibre. That's because as investors, we need to look ahead much more than we look backward.
The important question is where MercadoLibre is likely to go from here. Is it seemingly undervalued, with sustainable competitive advantages, and still growing briskly? Then it's likely worth buying and/or holding. Is it seemingly overvalued after all that growth and/or facing some challenges? Then perhaps sell or hang on while keeping an eye on the company.
If you don't know much about MercadoLibre, it's worth getting to know the company, as it could be a strong performer for your portfolio. Some have likened it to a combination of Amazon and PayPal, because it features a dominant online marketplace as well as a powerful fintech business.
In fact, in its own words:
MercadoLibre hosts the largest online commerce and payments ecosystem in Latin America. We are present in 18 countries including: Argentina, Brazil, Mexico, Colombia, Chile, and Peru. Based on unique visitors and page views, we are market leaders in each of the major countries where we are present.
Clearly, it's a fast-growing business. In its last quarter, revenue nearly doubled year over year on a currency-neutral basis, while gross merchandise volume (GMV) popped by 71%. Its shares seem more fairly valued than undervalued right now, so you might buy if you aim to hold for many years, or you might buy in increments over time, or you might simply add it to your watch list, hoping for a pullback.