This article will explain more about the best growth stock pick for 2023. The “free market” company is the one that investors should focus on.
Many investors have maintained their focus on growth businesses throughout the recent bear market, and some of them have even taken advantage of the reduced share prices to increase their holdings in these stocks. The dedication has been rewarded, as a large number of growth stocks have started to make a comeback.
My Best Growth Stock Pick for 2023
MercadoLibre (MELI -2.62%) is one of these stocks that are making a comeback. After falling by more than two thirds of its value during the prolonged bear market, it has more than doubled since reaching its 52-week low. Despite this increase, it is still possible to make an investment in MercadoLibre (the name of which literally translates to “free market” in English). The following are some of the reasons why shareholders should keep purchasing online and direct marketing retail stock.
During the bear market of 2022, several companies focused on e-commerce saw their business slow down significantly as consumers switched back to purchasing in physical stores. MercadoLibre, on the other hand, was virtually unaffected by the slowdown that affected competitors like Amazon.
Revenue of $10.5 billion in 2022 represented a year-over-year increase of 49%. E-commerce did see a slowdown, as evidenced by a gross merchandise volume increase of 21% to $34 billion. This is a drop from the 35% increase in 2021. The most rapid expansion was seen in the fintech division of MercadoLibre known as Mercado Pago. In just one year, total payment volume increased by an astounding 60%, reaching a total of $124 billion. That was higher than the growth of 55% in 2021.
In addition, MercadoLibre reported a profit of $482 million in 2022, which was a significant increase from the profit of $83 million reported in 2021. Even though operational costs climbed at a faster rate than sales, the company was nevertheless able to enhance its operating profitability by limiting the cost of revenue growth to 30% of the total growth.
The expansion of MercadoLibre is also driven by the company’s ability to capitalize on synergies created by the interconnection of its various business areas. It launched Mercado Pago to assist its customer base, the majority of which is cash-based and does not have bank accounts. Because of the service’s growing popularity, the firm decided to make Mercado Pago available to clients who do not shop on the MercadoLibre website.
In addition, it operates a logistics division known as Mercado Envios, which is responsible for storing, packaging, and shipping things that are sold online. Additionally, Mercado Credito makes it possible for customers and sellers who are short on funds to acquire loans through the platform. And much like Amazon, MercadoLibre has emerged as a formidable competitor in the realm of digital advertising by capitalizing on its website to publish online advertisements.
Because of this interconnectedness, MercadoLibre has a significant edge over its competitors. Even though Amazon and Sea Limited sell their products in parts of MercadoLibre’s markets, these competitors may still be at a competitive disadvantage due to the absence of available financial or logistical services.
This advantage over the competition is strengthened even more in a way that is entirely unique thanks to MercadoLibre. Doing business in Latin America can be challenging due to factors such as the region’s high inflation rate, political unrest, and unclear corporate regulations.
MercadoLibre, on the other hand, is successful because it meets these issues head on. Prior to the establishment of Mercado Envios, same-day and overnight shipping options were not readily available throughout the region. However, several Latin American countries now have access to shipping services that are more analogous to those found in the industrialized world. This is made possible by the company Mercado Envios.
Mercado Pago was the means via which the company introduced fintech to those who lacked access to traditional banking services. Nevertheless, the financial technology sector also assists clients who are dealing with excessive inflation. It does this through its investing arm, which is known as Mercado Pago, and it enables investors to make gains with minimum exposure to risk. This has made it easier for the company’s clients to keep up with the rising cost of living in Argentina, the company’s native market, where inflation currently exceeds 100%.
It is a fact that such attempts at mitigating the problem may become ineffective if inflationary pressures continue to mount. The fact that 24% of MercadoLibre’s income comes from that country in 2022 makes this a serious cause for concern for the company. However, taking into account the company’s market position in Latin America, its resistance to the economic downturn, and its capacity to deal with the difficulties of the region, it is likely that the business will be able to overcome these hurdles over the long run.
The stock of MercadoLibre appears to be poised for a meteoric rise in light of the company’s rapid expansion and synergies. Even though it was not able to avoid the bear market, it has managed to keep up a strong growth rate despite the increasingly difficult business environment.
It is a certain that economic turbulence and intense rivalry would likely continue to be issues of concern in Latin America. MercadoLibre, on the other hand, should deliver huge growth for many years to come because of the company’s powerful ecosystem and its capacity to find solutions to challenges.