This Is My Highest Conviction Stock Heading Into 2021

There are almost 4,000 different stocks you can trade that represent companies that have valuations of at least $300 million. The sea of options is enough to make some beginning investors throw up their hands in frustration…

Heck, I’m experienced at this and I won’t pretend to know enough about one-tenth of these companies to consider investing in them.

Luckily, as an individual investor, that’s okay. To meet your long-term financial goals, you simply need to make a few investments in companies you understand well. Today, we’ll cover the one company that I believe is the most “antifragile” — or able to benefit when exposed to time, chaos, and uncertainty — that I’ve come across in the past five years.

That company is MercadoLibre (NASDAQ:MELI), a powerhouse in Latin America that I believe has a very bright future in the decade to come.

An inspiring mission, a wide moat, lots of optionality

MercadoLibre’s mission is simple: To democratize commerce and finance in Latin America. But don’t confuse “simple” with “easy.” The company got its start in 1999 as an online marketplace similar to eBay. It has since morphed into an eBay/Amazon-type entity that serves as both a marketplace and an entity that can offer fulfillment (read, shipping stuff).

As you can see — based on the number of registered users — it has become fantastically popular.

CHART BY AUTHOR. DATA SOURCE: SEC FILINGS. NOTE THAT 2020 FIGURES ARE ACCURATE TO SEPT. 30, 2020.

This dynamic creates powerful network effects. Anyone selling goods knows MercadoLibre is the best place to offer them up online. No one else offers instant access to nearly 400 million customers. At the same time, with merchants flocking to the platform, non-users are further incentivized to join. That’s a powerful moat that a start-up would have a difficult time breaking through.

Since the beginning, however, MercadoLibre has also adapted in any and every way possible to help fulfill that all-encompassing mission. The most clear example is MercadoPago — the company’s digital payment option (akin to PayPal for those in North America). Originally, MercadoPago was simply intended to grease the wheels for merchants; so many Latin Americans were “under-banked” they had no way to pay for goods online.

Over time, however, MercadoPago has become so popular that it…

Continue reading at THE MOTLEY FOOL

 

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