Is MercadoLibre the Best Growth Stock of 2025? Here’s Why I’m All In

MercadoLibre (MELI) has been on my radar for a while now, and after digging into the numbers and weighing the risks, I’ve decided to invest. This isn’t a no-brainer stock—it comes with its challenges—but the potential rewards are enough to convince me to open a position. Let me walk you through why this feels like the right move.

Is MercadoLibre Still a Strong Growth Stock in 2025?

MercadoLibre is the dominant player in Latin America’s e-commerce and fintech sectors, operating in 18 countries like Brazil, Argentina, and Mexico. With over 218 million active users—nearly three times what they had in 2019—they’ve built an ecosystem that’s hard to beat. They’re not just a marketplace—they handle payments (Mercado Pago), logistics (Mercado Envíos), and even offer credit (Mercado Crédito). This all-in-one approach makes it tough for competitors to push them out.

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What’s even better is the market they’re in. E-commerce in Latin America is expected to grow at 19% annually through 2028. MercadoLibre is perfectly positioned to ride that wave, and they’ve shown they know how to capture market share.

How Are MercadoLibre’s Financials Holding Up?

Their financials are one of the big reasons I’m confident in this stock. In 2023, MercadoLibre pulled in $14.5 billion in revenue—a 37% increase from the year before. Their most recent quarter saw $5.3 billion in revenue, up 35% year-over-year and just edging out analyst expectations. Earnings per share (EPS) has also been growing, though not without some bumps. They recently reported an EPS of $7.83, missing Wall Street’s $10 estimate but still showing a 9.4% improvement year-over-year.

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Another highlight for me is their return on equity (ROE), which sits at 40%. That’s a strong signal they’re using shareholder money effectively. Plus, their operating cash flow per share is $32.25—way higher than their annual EPS of $19.46. They’re clearly generating a lot of cash, which is a good sign for growth.

What is the Target Price for MELI?

Analyst opinions are mostly positive. The average 12-month price target for MercadoLibre is $2,261, with a range of $1,685 to $2,800. Given the stock is trading around $1,799 right now, that represents a potential upside of about 25%. For context, this type of forecast aligns with strategies I mentioned in my 2025 Investing Playbook.

Is MELI Stock Overvalued?

Let’s be honest—this isn’t a cheap stock. The price-to-earnings (P/E) ratio is 64.72, and the price-to-sales (P/S) ratio is 4.91, both higher than industry averages. But there’s another metric that caught my attention: the price-to-earnings-to-growth (PEG) ratio, which is just 0.39. A PEG ratio below 1 typically means a stock is undervalued relative to its growth rate. That gives me confidence that the valuation is justified.

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What Risks Does MercadoLibre Face?

Of course, there are risks. Their recent earnings miss shows that growth isn’t always smooth, and operating in Latin America means dealing with economic and regulatory challenges. For instance, new import tariffs in Mexico could pressure margins, and Argentina’s economic instability is another wildcard. Then there’s the competition—Amazon is very active in Latin America, and while MercadoLibre has the home-field advantage, it’s something to keep an eye on.

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Why I’m Buying MercadoLibre Stock in 2025

Despite the risks, I believe MercadoLibre’s strengths far outweigh its challenges. They’re the leader in a rapidly growing market, their financials show strong growth, and their ecosystem gives them a competitive edge. Sure, the stock trades at a premium, but the growth potential justifies it in my view. As someone willing to take calculated risks, I’m confident this could be a rewarding midterm investment.

Should You Buy MercadoLibre Stock?

If you’re thinking about investing, I’d recommend keeping an eye on a few things. First, watch their earnings reports—revenue and EPS trends will be critical. Second, pay attention to how they handle challenges like tariffs and economic instability. Finally, keep tabs on the competition. Are they staying ahead of Amazon, or is the gap closing?

For me, the decision is clear. MercadoLibre has the market position, the growth story, and the financials to back it all up. I’m excited to see where this investment goes.

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