MercadoLibre (MELI 8.36%) and Sea Limited are two e-commerce operators not named Amazon.com that have seen torrid growth in the past year as a result of the pandemic. This duo is significantly smaller than the online juggernaut, but they serve large and growing international markets. On a Fool Live episode recorded on March 12, Fool contributors Brian Stoffel and Brian Withers discuss why one of these two quality companies has the edge and would be the better stock for investors right now.
Brian Stoffel: I would say that MercadoLibre is the winner. It is my second largest holding, whereas Sea Limited is the fifth. I don't want to make that sound like you shouldn't invest in either one, because I'm wrong all the time. I think it's got greater financial fortitude, a wider moat, and all these stocks are expensive by traditional metrics, but it's less expensive than Sea Limited is. While I give Sea Limited credit for having a business model that's got that gaming extra catalyst in there and probably a bigger opportunity than I even realized, I will go with MercadoLibre.
Brian Withers: Awesome. I don't know if it surprises viewers, but I'm going to go with MercadoLibre too. It's been at the business longer. I like that it's innovating in fintech. It's really made a big effort to invest in technology and their IT, especially in the fintech space. They have tremendous momentum, tremendous brand power with Mercado Pago, and it's got a solid management team that's been together for decades. That's hard to underestimate that advantage.
They've proven that they can scale. Seven airplanes for their logistics business, when I saw that announcement I was just so giddy because that's just going to help them. You don't buy seven airplanes if you're just going to sit around and look at them. They're going to put these guys to use and it's going to help them run their business better and deliver better for their customers.
Even though I put my MercadoLibre first, I only own 21 stocks and Sea Limited is a large position in my portfolio. It's smaller than MercadoLibre, but if I had to pick one, I would go with Mercado Libre. But I don't know that there's a rule that any investor has to just pick one regional e-commerce player for their portfolio.
Brian Stoffel: Exactly.