Why These Shares are Tanking

The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world.

Shares of MercadoLibre are getting slammed right now despite meeting analysts expectations for revenue and earnings per share -- so, what gives? Many investors are worried about all of the company's foreign exchange headwinds, but honestly that should have been baked into their expectations when investing in this stock in the first place. Sure, shares got a little frothy and still trade at a steep P/E, but they've got monster growth to boot. MercadoLibre now has 37% more users than last year and has expectations for near-30% growth rates over the next five years. For investors waiting on the side line for a discount, the dip over the last few weeks could be your moment.  

Then again, Mercadolibre has inherently more risk than a proven domestic company. If you like the idea of supercharged emerging market growth but are worried about instability, you should read about "3 Companies Set to Dominate the World." They are all domestically based companies with sterling brands and business models that are taking proven domestic techniques and applying them to the emerging world. Their potential for profit is enormous, and they're a bit more stable than your traditional emerging market play. Click here to read about them now.

Austin Smith owns shares of McDonald's. The Motley Fool owns shares of Arcos Dorados and MercadoLibre. Motley Fool newsletter services recommend Arcos Dorados, McDonald's, MercadoLibre, and PriceSmart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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