The United States government has issued three economic stimulus payments since the pandemic started, with U.S. citizens getting as much as $3,200 per person total, and more for dependents. The government hasn't released information about a fourth payment, but it will begin to issue child tax credit payments to many families this month.

Many of the families receiving those benefits need those economic impact payments, more commonly known as stimulus checks, to pay for basics such as food and utilities or to lower their debt burdens. But if they have money left over after paying bills, clearing credit card debt, and establishing an emergency fund, they may want to consider investing it in the stock market. 

If they do, I'm recommending Latin American e-commerce giant MercadoLibre (NASDAQ:MELI) as the stock to buy. Here's why.

Person paying a cashier with a mobile wallet.

Image source: Getty Images.

MercadoLibre has a great and growing business

MercadoLibre is the largest e-commerce company in South America. It runs several businesses, including an e-commerce site similar to Amazon and eBay, and a digital payments business similar to Square called MercadoPago. It operates in 18 countries and is the market leader in every one.

Growth has been outstanding over the past few years. Most recently, in the 2021 first quarter, net revenue increased year over year by 158% (on a currency-neutral basis) to $1.4 billion. The biggest growth driver was e-commerce, which increased 188%. Gross merchandise volume (GMV) increased 114%.

The company's largest market is its home country of Argentina, where revenue rose 223% and GMV grew 183% year over year. Mexico and Brazil were also top markets, but other areas are growing rapidly as well. 

Fintech capabilities were also strong, growing 117% and accounting for about a third of total revenue. MercadoPago's total payment volume (TPV) increased 139%, and 58% of its TPV came off-platform (i.e. from those not using the MercadoLibre commerce platform). That's a pivotal market of consumers who are slowly embracing digital payments for all types of transactions, specifically for a population that's traditionally underbanked. MercadoPago gives these consumers payment options while expanding its reach and adding sales to MercadoLibre's total.

Although MercadoLibre still posted a loss of $34 million in the first quarter to account for increased taxes, its net income for the quarter was positive ($9.5 million). There's no guidance for a profit in the near future, but investors seem to be okay with that for one reason: MercadoLibre's growth opportunities are simply enormous. It has an addressable market of 635 million people, with a significant percentage still underbanked and in need of alternative payments. It's also one of the fast-growing markets for internet penetration. That gives it growth opportunities from several channels.

A McKinsey report found that, in Argentina, the percentage of payments using cash decreased from 95% in 2010 to 87% in 2020, and in Brazil, from 86% to 74%. That's a lot of people not engaged with the digital economy, as compared with the U.S., where cash-only payments were almost halved, from 51% to 28%, over the same period. That doesn't even cover many smaller Latin American countries. Those numbers may change materially in 2021 as the pandemic opened more doors for digital payments, and they point to continued adoption going forward. 

Two people at a table with coffee cups looking at a mobile phone.

Image source: Getty Images.

MercadoLibre is an expensive stock

According to traditional valuation methods, MercadoLibre stock isn't cheap. It doesn't have net positive earnings yet, so we can't calculate a price-to-earnings ratio. Shares trade at 16 times sales, which is considered expensive but in line with its peers and less expensive than other growth companies. Its enterprise value (market cap plus debt, minus cash) divided by EBITDA (earnings before interest, taxes, depreciation, and amortization) is a high 192. 

But aside from valuation metrics, one share of MercadoLibre stock trades at $1,552 as of this writing (the price though is down from 23% from its 52-week high). Most retail investors can't get too many shares, and some wouldn't be able to buy any without making a fractional share purchase. If the government cuts another stimulus check, they might be able to purchase high-priced stocks, and should consider buying MercadoLibre.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.