Mercadolibre Inc (MELI): Why You Need to Consider This Unique Growth Opportunity

But the opportunity is far from over; the Latin America ecommerce industry still offers plenty of room for growth in the middle and long term. Only 1.5% of retail transactions are done online and just 10% of the population shops online. As internet penetration continues growing and people become increasingly familiar with ecommerce in general and Mercado Libre in particular, the company stands to benefit from strong secular growth drivers.

Source: Mercado Libre investor day presentation

Besides, the business model is quite attractive: since revenue grows much faster than operating expenses, this means that profit margins tend to increase as the company grows in sales. Revenue growth and margin expansion should be two powerful growth drivers for the company over the next years.

Economic volatility can create some important uncertainties for Mercadolibre Inc (NASDAQ:MELI) investors, especially when it comes to fluctuations in exchange rates which can have a big impact on the company´s financials. However, over the long term, investors are more than fairly compensated for the risks by gaining exposure quite an especial growth opportunity.

Bottom line

Online commerce is a high growth industry, especially in Latin America where we have barely seen the tip of the iceberg in terms of market penetration and long term growth prospects. Thanks to its rock solid leadership position in this market and its profitable business model, Mercado Libre provides investors with a fairly unique opportunity for growth.

The article Why You Need to Consider This Unique Growth Opportunity originally appeared on Fool.com and is written by Andrés Cardenal.

Andrés Cardenal owns shares of Mercado Libre and Amazon.com. The Motley Fool recommends Amazon.com, eBay, and MercadoLibre (NASDAQ:MELI). The Motley Fool owns shares of Amazon.com, eBay, and MercadoLibre. Andrés is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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