Croda International: watch for the recovery

Croda International (LSE: CRDA) has endured a rough few years. The pandemic-era lipid boom unwound sharply, leaving the stock nursing a painful hangover. 

The numbers, however, are genuinely turning. Sales and profits have been recovering over the last nine months and there are encouraging signs ahead.

Management has guided for organic sales growth of 3%-6% in 2026, with further margin expansion. And the next update is due at the end of July. 

The key risk is that Life Sciences – especially Crop Protection – remains susceptible to inventory channel cycles. And that’s hard to avoid. 

Long-term investors, however, can look to ride the waves a bit with this one. The company’s key competitive strengths are still firmly intact.

Source: Fiscal.ai

The stock isn’t far from its 52-week highs, but it’s near a 10-year low in terms of valuation multiples. So I think it’s definitely worth a look at today’s prices.

Renew Holdings: UK infrastructure

Andy Burnham is widely expected to become Britain’s next Prime Minister. And the Makerfield MP is focused on infrastructure. 

I think that could be a huge boost for Renew Holdings (LSE:RNWH). The stock market, however, doesn’t seem to be hugely positive.

Renew is Network Rail’s largest infrastructure services supplier (think HS2 expansion). And it’s also heavily involved in the water business (another key priority).

The point isn’t just that spending is set to increase. It’s that infrastructure investments should bring long-term maintenance contracts, which is where Renew specialises.

Operating margins are only around 5.3%, so delays to projects can have a disproportionate effect on profits. Unironically, investors have seen plenty of those recently.

Source: TradingView

The stock, however, is trading at a significant discount to analyst price targets. And I agree that it’s worth checking out in July.

MercadoLibre: Latin American fortress

MercadoLibre (NASDAQ: MELI) isn’t a traditional retailer. It’s the leading e-commerce marketplace, the largest digital payments network, and a growing logistics operator across Latin America.

Foreign exchange rates are often a risk. But anyone who thinks it’s the same for all businesses hasn’t been paying attention to Argentina in the last few years.

Behind a fluctuating currency, the company has been making huge progress. The stock market, however, seems to be ignoring this.

MercadoLibre shares are down 37% over the last year and the big reason for this is margin compression. But I think that’s a feature, not a bug.

The firm’s infrastructure investments make it extremely hard to compete with. And shipping costs in Brazil fell 17% compared to the previous year.

In other words, the network is getting cheaper to run as it continues to clock 49% net revenue growth. That’s a powerful combination that I think deserves attention.

What I’m doing

It’s always possible that something dramatic happens in the stock market. And that could force other names onto my buying radar in July. 

As it stands, however, Croda International, Renew Holdings and MercadoLibre are all on my buy list. And I’m optimistic about all three over the long term.

Should you invest £5,000 in Croda International Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Croda International Plc made the list?

Stephen Wright owns shares in Croda International.

The post 3 stocks I’m looking to buy in July appeared first on The Twelfth Magpie.

In particular, high-quality growth stocks appear to offer the best value in many years. Here are two that I think merit closer examination today.

MercadoLibre

Imagine there was a company that combined Amazon, PayPal, and eBay in one, while operating across an entire continent. Well there is, in the shape of MercadoLibre (NASDAQ:MELI).

It resembles Amazon in the sense of running a massive logistics operation to support Latin America’s leading e-commerce marketplace. Meanwhile, its Mercado Pago fintech platform has similarities to PayPal, but is growing much more quickly.

These businesses combine to form one powerful ecosystem. But while Q1 revenue and financial income grew 49% to $8.84bn — the fastest growth in nearly four years — the stock is down 33% over the past year.

This is because the company’s margins have been under pressure due to the firm pouring money into building additional warehouses, lowering the free shipping threshold, and expanding credit throughout the fintech business.

Naturally, Wall Street hates it when companies sacrifice near-term profits to drive long-term growth. And there is fierce competition from Amazon in the region, adding risk to the investment case.

However, I think this is a classic case of investors not seeing the forest for the trees. That’s because e-commerce and digital banking are taking off across Latin America (and it’s still early days), while MercadoLibre’s growth is accelerating.

In particular, the company’s advertising opportunity remains very large. Digital ad revenue rocketed 63% in Q1.

Our huge audience and rich first-party data mean we are uniquely placed to capitalize on structural changes taking place in the advertising industry.
MercadoLibre

As a shareholder, I want to see management put the pedal to the metal to capitalise on this long-term opportunity. And with the stock currently trading at a historically low valuation, I think it’s worth serious consideration.

Note, Big Short investor Michael Burry sees a lot of value here, as he’s been buying shares recently.

Wise

Another quality growth stock that has been under pressure recently is Wise (LSE:WISE). It has slumped 24% in the past month after reports that the cross-border transfer specialist faces a probe in Belgium over money laundering.

Now, it’s early days and we don’t know the full facts. But there’s the potential for reputational damage and/or fines if significant illicit proceeds have flowed through Wise’s network.

However, if this investigation becomes a minor footnote in history, there could be a very attractive opportunity here. That’s because the company is still growing strongly, with Q4 FY26 showing noticeable progress.

• Quarterly cross-border volume increased 26% to £49.4bn
• Active customers grew 22%to 11.3m
• Customer holdings rose 37% to £29.4bn
• Underlying income jumped 24% to £435.3m

Meanwhile, Wise continues to separate itself from rivals by lowering the cross-border take rate by 1 basis point to 0.51%. And 75% of transfers were instant (up from 65% the year before).

In other words, the service is getting cheaper and faster.

We are making good progress on building the network for the world’s money…More people are using Wise at home or abroad for their everyday spending, for paying bills, for savings and investments.
Wise

After the recent pullback, the stock’s trading at a cut-price 19.5 times forward earnings.

Should you invest £5,000 in Wise Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Wise Plc made the list?

Ben McPoland owns shares in MercadoLibre and Wise.

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While share prices continue to make new highs, the bond market’s more cautious. Is the fixed income sector trying to send a warning to stock market investors?

The bond market

Ten-year government bonds currently yield 4.51% in the US and 4.86% in the UK. But the interesting thing is where they’ve been going recently.

Since the start of March, yields in both cases have been going higher. And there’s one major reason for this – inflation.

Source: Trading Economics

Returns on bonds are fixed. That means inflation – which makes the value of those returns fall in real terms – is a big risk.

When investors are worried about this, bond prices fall and yields rise. And that’s been happening recently. 

By itself, that’s not a big surprise. But while the bond market is wary of inflation, the stock market isn’t. That makes stocks unusually risky, in relative terms. So what should investors do?

What should investors do?

In one way, stocks are always riskier than bonds. There’s more chance of a firm’s earnings going down than it not paying its debts.

As a result, investors who buy stocks should look for something to offset this. That means higher implied returns, which come from lower prices.

The equity risk premium measures how much of a discount stock investors get. In other words, how much they get paid for the extra risk.

Rising share prices and falling bond prices compress this value from both sides. And analysts have noted that it’s unusually narrow right now. 

That makes equities – as a group – unusually risky relative to bonds. But I don’t think the solution is to stop buying stocks and look elsewhere.

Even when share prices are high, there are often names trading at unusually low valuations. And that’s where I think investors should look. 

Where are the bargains?

One stock I’ve been looking at recently is MercadoLibre (NASDAQ:MELI). It’s sometimes referred to as Latin America’s Amazon, or something like that. 

That’s a slightly lazy comparison, but it’s not entirely without merit. The firm operates the largest e-commerce platform in Argentina, Brazil, and Mexico.

The stock is 34% off its 52-week highs. And the main reason is that margins have been contracting as it looks to make life harder for competitors.

Focusing on growing the business while driving down costs for customers, however, is exactly what Amazon has done before. That’s why it’s so hard to compete with. 

Source: Fiscal.ai

The falling share price means the stock now trades at its lowest price-to-book (P/B) ratio in years. And this is while reporting 40% annual revenue growth.

I think this looks like a really interesting opportunity. That’s why the stock’s on my list of shares to buy in June. 

Inflation risks

The stock market’s ignoring the bond market’s inflation concerns. In some ways, that makes MercadoLibre an unusual idea.

In recent years, Argentina hasn’t exactly been famous for currency stability. That’s a genuine risk for investors to pay attention to.

The point though, is that this risk hasn’t been more attractively priced in years. And this is what investing in the stock market’s all about.

Stephen Wright owns shares in Amazon.

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After all, the investor made famous by The Big Short film is a deep-value stock-picker, not a long-term growth investor like myself. 

Yet he recently bought shares of MercadoLibre (NASDAQ:MELI), which by any definition is a high-calibre growth stock. The e-commerce and fintech powerhouse has grown revenue at a five-year annualised rate of about 53%! 

Historically, this heady growth has commanded a high market premium. Last week though, the stock crashed around 16% after MercadoLibre’s first quarter earnings, taking the 12-month decline to 38%. 

But is this dip a potentially lucrative buying opportunity to consider closely? Let’s take a look.

How does it make money?

MercadoLibre operates Latin America’s largest e-commerce marketplace across 18 countries. Due to its sprawling fulfillment network, which allows for the rapid delivery of items, it often gets called the ‘Amazon of Latin America’. 

There’s some truth to that, as the company also has a Prime-like subscription service and TV streaming platform. And like Amazon, it boasts a fast-growing digital ad business (Mercado Ads), which saw revenue surge 73% in Q1. 

A point of difference however, is that the firm doesn’t sell cloud services to others. Instead, it has a fintech unit (Mercado Pago) that offers credit and various other financial services to 83m people.   

Why’s the stock crumbled lately?

The stock’s nosedived because Q1 showed that the operating margin shrank almost six percentage points to 6.9%. Below are some things hurting near-term profitability:

• Provisions for doubtful accounts (potential bad debt in its surging credit business).
• Massive logistics expansion in Brazil (it’s opening 14 fulfilment centres in 2026).
• Higher marketing spend. 

In Brazil, its largest market, MercadoLibre has lowered the free shipping threshold. That’s great for customers, but investors fear this is due to rising competition from Amazon and Shopee.

This adds risk, for sure. However, it’s worth noting that Q1 revenue and financial income accelerated 49% to $8.84bn, including 55% in Brazil.

This was the company’s fastest quarterly growth in almost four years!

Arguably then, MercadoLibre is right to put the foot on the growth accelerator here, given the massive long-term opportunity.

We have a once-in-a-generation opportunity to transform how hundreds of millions of Latin Americans shop, pay and access financial services…The impact of our investments is visible today as a meaningful but deliberate compression of margins in the near term, but it is equally visible in accelerating growth, deeper engagement, greater scale, and a strengthening competitive position.

Q1 2026 report. 

Back to Burry

Burry clearly views the recent sell-off as an opportunity. He wrote: “I expect long-term 15% annualised returns at 15 years or more”.    

After the crash, the stock’s trading at 27 times next year’s forecast earnings. For a high-quality company still regularly posting 30%+ top-line growth, that’s cheap.

Especially when you consider that the average American makes 41 online purchases a year compared to just seven for Latin Americans. 

As management points out: “The pie is increasing at a faster pace than it was before, and we are taking an even larger slice of that pie”. 

I think patient investors should consider buying the dip today while the market worries about short-term margin pressure.

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With this in mind, here are two growth stocks that I think are worth considering buying for the next five years. While each is different in size, I think both have clear paths to becoming larger companies in future.

$2.25trn giant

Let’s start with Amazon (NASDAQ:AMZN). With a colossal $2.25trn market cap, the company is no spring chicken these days. But despite its relative maturity and massive size, I can’t think of many firms pursuing more growth avenues.

For starters, it has integrated AI across its ecosystem, including agentic AI shopping assistant Rufus, which can shop tens of millions of items (including other online stores) and make purchases on behalf of customers. It helped drive nearly $12bn in incremental annualised sales last year.

Then there’s high-margin digital advertising, the fastest-growing segment, which I believe is underestimated given Amazon’s massive vault of consumer data. Ad revenue surpassed $68bn last year, with 22% growth in Q4.

Another emerging growth market is Amazon Leo, its satellite internet project which aims to compete with Starlink. The list goes on: AI chips, self-driving vehicles (Zoox), healthcare, as well as the core e-commerce and cloud computing operations. 

Amazon expects to invest about $200bn in capital expenditures this year, mainly on data centres to expand cloud capacity for AI demand. And the risk is that the company doesn’t get a good return on this huge capital outlay, especially as it’s now raising debt to fund it.

However, management isn’t doing this with its eyes closed and fingers crossed. On the Q4 earnings call, CEO Andy Jassy said: “Customers really want AWS for core and AI workloads, and we’re monetising capacity as fast as we can install it.”

Today, the stock can be picked up for 29.2 times earnings (a 10-year low).

$85bn Latin American leader

MercadoLibre (NASDAQ:MELI) has essentially taken the Amazon playbook and successfully applied it to Latin America. Already a regional leader in e-commerce, its digital ad revenue surged 67% in the fourth quarter.

The firm also has its own streaming platform (Mercado Play) and subscription service (MELI+). And like Amazon, its vast logistics network allows it to deliver parcels faster than rivals. It recently opened its first fulfilment centre in China, allowing quicker shipping to its five largest markets (Brazil, Mexico, Argentina, Chile, and Colombia).

Revenue jumped 45% to $8.76bn in the fourth quarter, as gross merchandise volume rose 36.8% to $19.9bn. With e-commerce penetration levels roughly half the level of the US, UK, and China, the company has a massive growth opportunity ahead.

But what separates MercadoLibre from Amazon is its fintech unit, Mercado Pago, which offers credit and various financial services. Here, assets under management have grown from $2bn to almost $19bn over the past three years, with monthly active users more than doubling to 78m.

The stock has fallen 35% in less than a year because the company is investing in additional free shipping and fulfilment centres. This is pressurising margins in the near term, adding some risk.

But like Amazon, I think these investments will strengthen MercadoLibre’s competitive position in the long run, allowing it to capture the sizeable growth opportunities ahead.

The post 2 excellent growth stocks to consider for a SIPP for the next 5 years appeared first on The Twelfth Magpie.

Right now, shares in some outstanding businesses are trading at unusually low prices. And when that happens, investors should be thinking about piling in. 

Long-term quality

When it comes to investing, I tend to think that the quality of the underlying business is what matters most over the long term. But even the best companies have their ups and downs. 

One thing that can cause this to happen is when a firm invests heavily to boost its competitive position. That causes profit margins to contract and the stock starts to look expensive. 

A lot of the time, though, this is just the company investing in its own growth. And the results show up in the cash flow statement sooner or later. 

In the short term, though, it can cause share price volatility. But this is something investors who think in years or decades – rather than weeks or months – can take advantage of.

Wise

UK-listed Wise (LSE:WISE) is a good example of this. It feels like every time the payment processor reports earnings, its take rate (the amount it charges) is lower than it was before.

Almost every time, the stock market interprets this as a sign of weakness – why would the firm charge less unless it’s facing competitive pressure? In reality, though, it’s the opposite. 

Driving down prices widens the gap between the business and its nearest competitor. And it means that anyone looking to send money has an even stronger reason to use the UK company. 

The risk is that banks start bringing down their own charges for cross-border transactions. But while that threat can’t be eliminated, bringing down its own take rate does help Wise to limit it.

MercadoLibre

MercadoLibre (NASDAQ:MELI) is in a similar situation. In its most recent update, it reported 45% revenue growth and an 11% decline in earnings per share – the stock fell 14% as a result. 

The main reason margins fell is that the e-commerce company made some big investments. It lowered its threshold for next-day delivery and invested heavily in new fulfilment centres.

Those might weigh on short-term profits, but they significantly strengthen the firm’s long-term position. Competitors now have to offer something similar or risk being left behind.

Without MercadoLibre’s scale, that’s extremely hard to do without losing money. And that’s why I think the stock market’s reaction is the wrong one from a long-term perspective.

Be greedy

Most of the time, the stock market knows that Wise and MercadoLibre are outstanding businesses with terrific growth prospects. And it prices them accordingly. 

Right now, though, I think investors are focusing on the risks. In Wise’s case, that’s the possibility of geopolitical tensions making it harder to facilitate transactions across borders. 

With MercadoLibre, there’s a threat of higher oil prices reigniting hyperinflation in Argentina. The situation is just starting to come under control, so that could be a real setback.

A lot of the time, investors ignore these risks – and that’s a mistake. But it’s also a mistake to focus on them too much, which is what I think is going on right now. 

As a result, I think these are two growth stocks that investors should consider buying in March. They’re extremely high-quality businesses trading at unusually low multiples.

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Here, I’ll explain why I’m happy for it to occupy the top spot as we start 2026.

Large opportunity

The stock in question is MercadoLibre (NASDAQ:MELI). This is Latin America’s largest company by market-cap, though it’s listed in the US on the Nasdaq.

So why Latin America? Well, the region has roughly 650m people. This makes it a larger population than the European Union (about 450m) and almost twice the size of the US (340m).

Meanwhile, the nominal GDP of the region is currently estimated at around $7.3trn. To put that in context, if Latin America was a single country, it would be the world’s third largest economy behind the US and China.

MercadoLibre operates the region’s leading e-commerce, FinTech, and digital advertisement businesses across 20 countries. E-commerce in Latin America is still in its infancy, with around 12%-15% of shopping done online versus roughly 30% in the UK. 

Meanwhile, around 70% of Latin America’s population is considered either unbanked or underbanked. As such, financial services there also have an incredibly long runway of growth ahead (likely decades).

The firm’s FinTech platform (Mercado Pago) now has 72m+ users, giving it insights into the spending habits of its customers. This data is a key competitive advantage over rivals.  

Finally, the company’s already the region’s third-largest digital advertising player behind Meta and Google. However, ad revenue as a percentage of the firm’s marketplace gross merchandise value (GMV) is still only about 2% today. Amazon‘s is far higher.

As such, management sees a blue-ocean opportunity to become a much larger advertising platform, which bodes well for the company’s long-term profitability (digital ads have very high margins).

Not an overpriced growth stock

Speaking of which, this is another reason why I’m bullish here. MercadoLibre is now firmly profitable, with earnings per share expected to grow at roughly 40% in both 2026 and 2027.

Based on current forecasts, the forward price-to-earnings (P/E) multiple for 2026 is around 36, falling to 26 by next year.

For a tech company that’s grown revenue above 30% for 27 consecutive quarters (and is still optimising for scale rather than profits), I see this as an attractive valuation. I think other growth-oriented investors could consider buying the stock.

Things I’m watching

That said, it would be naïve not to acknowledge the risks here. So what am I keeping an eye on? Rising e-commerce competition is one thing, especially from Asia’s Shopee, which has parked its tanks on MercadoLibre’s lawn in Brazil (its largest market).

I still think MercadoLibre will maintain its advantage due to its ts deep regional knowledge and sprawling logistics network, which allows much faster parcel deliveries. But it’s certainly something to watch, as it could lead to a margin-bruising price war.

Also, the firm has a ballooning consumer credit portfolio, which now includes credit cards, so I’ll be monitoring non-performing loan figures moving forward.

Finally, I’m visiting Brazil and Mexico later this year. While I’m there, I’ll test the MercadoLibre user experience and do further research.

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Right now, my best growth share to consider buying and holding for the next 10 years is MercadoLibre (NASDAQ:MELI). And as the name suggests, you won’t find this sandwiched somewhere between Marks & Spencer and NatWest in the FTSE 100.

So why this particular stock?

A typical day in Buenos Aires…

MercadoLibre, which means ‘free market’ in Spanish and the language spoken in most of the 18 countries the firm operates in across Latin America. The Montevideo, Uruguay-based business runs the region’s leading e-commerce marketplace and fintech platform (digital wallet, payments, insurance, investments, etc).

Its biggest markets are Brazil, Mexico and Argentina, where more people are choosing to send 100% of their salary to its Mercado Pago account. This app pays attractive interest, unlike traditional banks, and now has 72m monthly active users.

Incoming CEO Ariel Szarfsztejn recently described a typical routine of a customer in Buenos Aires. In the morning, they might take the bus or train to work, paying with MercadoLibre’s app. Then use its QR codes to pay for lunch, while possibly surfing its e-commerce site.

On an evening, they may buy groceries through the firm, or pay for them with its app in store. Check their stocks or crypto on Mercado Pago. And then maybe unwind with some entertainment streamed through its Mercado Play app.

In other words, the company’s becoming increasingly interwoven into daily life across Latin America. And that bodes very well for its future earnings potential, with online shopping and financial services taking off across the region.

Continent-sized growth opportunity

In the past 10 years, revenue has leapt from $652m to nearly $21bn last year. That’s a roughly 32 times increase! Naturally that torrid rate of growth can’t continue forever, but Wall Street still expects top-line growth of 37% this year. Then above 20% over the following three years.

But the long-term opportunity remains incredibly large. Last year, MercadoLibre still only had 100m buyers out of a population of 650m people.

Meanwhile, a third pillar is emerging alongside e-commerce and fintech. Namely digital advertising revenue, an opportunity management describes as “huge“. Like Google and Meta, the firm’s sitting on vast amounts of valuable consumer data.

We think that Latin America will get to UK standards or even Asian standards of e-commerce penetration. There’s no reason why that will not happen…The size of our business…is huge today, but it could be even bigger in the coming years. Ariel Szarfsztejn, speaking to Scottish Mortgage Investment Trust.

19% dip

Now, one risk is that MercadoLibre’s facing rising competition from Shopee in Brazil and Amazon elsewhere. To combat this threat, it has cut the free‑shipping threshold while investing heavily in fintech infrastructure.

Consequently, this is putting pressure on margins, which is worrying some (short-term) investors. This is reflected in the share price, which has fallen 19% since hitting a record high back in June.

I think this dip presents an attractive buying opportunity that long-term investors should consider. The stock’s now trading at 25 times forecast earnings for FY2027 — very cheap compared to historical norms.

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Looking ahead to the next 12 months however, I think another growth stock has more potential. Here’s why I see it outperforming Nvidia.

A powerful ecosystem

MercadoLibre (NASDAQ:MELI) may not be well known in Europe, but it certainly is in Latin America, where it operates across 18 countries.

Mexico’s competition watchdog estimates that MercadoLibre and Amazon together command up to 85% of the country’s e-commerce market — a near duopoly. And MercadoLibre has a leading position in other key markets in Latin America.

Like Amazon, MercadoLibre has built vast logistics networks. These allow it to operate the region’s fastest shipping network, with record levels of same-day delivery in Argentina and elsewhere.

I’m sure many readers are familiar with the ‘sponsored’ ads on Amazon (ie the seller’s paying to advertise their product in that slot). Well, MercadoLibre has the same lucrative digital ads, while also operating a Prime-like loyalty programme (Meli+).

Finally, it has one of the region’s most popular fintech apps (Mercado Pago), where users can pay for stuff online and offline, access loans, insurance, make investments, and more.

This seemingly motley collection of businesses — e-commerce marketplace, logistics, loyalty programme, digital payments, credit, and advertising — actually form a tightly woven, reinforcing ecosystem.

Incredible growth

The company’s grown revenue from $2.3bn in 2019 to $20.8bn last year. In this time, it has swung from a $172m loss to a net profit of $1.9bn.

In Q2 of this year, strong growth continued across the business.

Note that the firm’s sacrificing profits in the near term for long-term growth. For example, it’s reduced the cost of shipping for sellers, while lowering the free shipping threshold in key markets like Brazil.

As a long-term shareholder, this is exactly what I want to see. However, Wall Street isn’t often as patient when it comes to such things. So this could become an issue in forthcoming quarters.

Meanwhile, the firm’s growing credit portfolio adds complexity and risk. Economic conditions could worsen in Latin America, increasing the amount of bad loans on its books.

Reasonable valuation

The stock’s up 2,300% over the past decade, making MercadoLibre the largest company in Latin America, with a $121bn market-cap.

For 2025, Wall Street expects revenue to exceed $28bn (+35%), before reaching more than $43bn in 2027. Despite heavy ongoing investments, profits are expected to more than double in this period.

Yet the valuation is far from silly for a high-quality growth company. We’re looking at a forward price-to-earnings ratio of 36, falling to 26 by 2027. This is actually lower than Nvidia, at 39 and 28 times respectively.

Prediction

For the record, I also own Nvidia shares as well as MercadoLibre. However, news that Beijing has ordered all Chinese tech firms to stop buying Nvidia’s AI chips isn’t great. I think this could act as a drag on the stock into 2026, and even erase recent gains.

With Nvidia now looking unlikely to surprise Wall Street with beat-and-raise quarters, I fancy MercadoLibre to outperform it over the next 12 months. As such, I reckon it’s worth checking out.

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Established tech giant

Amazon (NASDAQ:AMZN) is a classic case study in building optionality. It started out as an online book seller, before morphing into the ‘everything store’ by allowing third parties to sell on its platform. 

Today, Amazon is the e-commerce behemoth we all know, as well as a global leader in cloud computing through AWS. Then there’s Prime, Alexa, Twitch, and developing projects like self-driving cars, delivery robots and drones, an internet satellite constellation, and more.  

Amazon is also quickly becoming a digital advertising giant. In Q2, ad revenue hit nearly $16bn, up 23% year on year. This income has far higher margins than retail sales, and should noticeably boost Amazon’s profitability over time. 

However, all these things rolled into one does invite regulatory scrutiny, especially in Europe. So antitrust action could force tighter rules or even a break-up one day. 

Nevertheless, with the stock trading at a fairly reasonable 34 times forward earnings, I think Amazon looks attractive. Especially when the long-term growth opportunities in higher-margin digital advertising and AI cloud computing appear substantial.  

Emerging tech giant

Next is a mini Amazon in the making: MercadoLibre (NASDAQ: MELI). Indeed, it’s often called the ‘Amazon of Latin America’. 

That’s because the company also has a large e-commerce marketplace and extensive logistics network, as well as a fast-growing advertising business and Prime-like subscription service.

But MercadoLibre’s optionality extends to fintech offerings, namely Mercado Pago (digital payments, savings and investment features) and Mercado Crédito (loans to both merchants and unbanked consumers).

These operations spin into each other like a well-oiled flywheel across 18 nations. In Q2, net revenue rose 34% to $6.8bn, with gross merchandise volume growth in all markets. Mexico performed strongly while Argentina returned to growth after years of economic turbulence. 

Of course, it’s important to acknowledge that Latin America isn’t always the safest sandbox to play in. Wild currency swings, hyperinflation, and political instability in core markets can impact profitability. These are unavoidable risks moving forward here. 

However, this is also a region where traditional banks have often treated customers poorly, or left them behind completely. MercadoLibre already has 68m monthly active fintech users. But to fully capitalise on the opportunity, it’s aiming to become a fully licensed digital bank. 

This would allow it to grow the loan book more aggressively and at a potentially lower cost, as well as offer a wider range of financial products. And while this increases the risk of rising bad loans, it also opens up a massive long-term growth opportunity.

In e-commerce, the firm is slashing shipping costs for millions of consumers, which is putting pressure on margins. But over time, this should keep shoppers loyal and deepen the company’s competitive advantages. And like Amazon, digital advertising should help boost profitability.

The stock is trading at 36 times next year’s forecast earnings. Given that the company is still decisively prioritising growth over profits, that’s by no means outrageous.

Overall, MercadoLibre strikes me as a compelling long-term play on the digitisation of Latin America.

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