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It's Down More than 30% This Year. Should Investors Consider Buying MercadoLibre Right Now?

By Rachel Warren and Toby Bordelon – Dec 17, 2021 at 11:47AM

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The Latin American e-commerce giant has seen shares tumble in recent months.

There's no shortage of great stocks trading at discounts right now, and Latin American e-commerce giant MercadoLibre (MELI 4.05%) is one of them. In this segment of Backstage Pass, recorded on Dec. 3, Fool contributors Toby Bordelon and Rachel Warren discuss the stock and respond to a member's question.

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Toby Bordelon: Let me look at these questions here really quick. Darrin asks about MercadoLibre. I don't know if either of you have any thoughts on this. I will say, again, something I mentioned in the last show. Brian Withers mentioned in Slack to me, it's like the price-to-sales ratios is at a five-year low. Looking at this now, it one of his companies he really likes.

Yeah. I think, Darrin, I'm looking at it myself, I don't own shares. I don't think I do. It might be my wife's IRA, but I don't own shares in my main account, my personal account. I'm looking at it. I'm seriously looking at getting in, people have been talking about this for a long time. This might be a good opportunity. Jose, or Rachel, do you guys have any thoughts on MercadoLibre at all?

Rachel Warren: Yeah. I'll jump in here real quick.

Toby Bordelon: Sure.

Rachel Warren: I think this is a great company. I've written about it a lot in the past. I do not currently own shares either, although it's one I've been watching and perhaps after today I will not talk about it anymore so [laughs] I can take advantage of the discount.

It's interesting because this is a company I believe that dominates the Latin American e-commerce space. For anyone who is not familiar, that is a massive e-commerce market. According to Statista, Latin America has about 300 million digital buyers and retail e-commerce sales in the region were already above $70 billion two years ago before the pandemic.

This is a huge area of growth for the company. This is an area that's growing rapidly as well. A market that is growing very much on par with what we're seeing here in the U.S. I think this is the same thing we've been seeing with a lot of really awesome stocks that we love to talk about a lot.

The market is not really responding in the way that you would expect given the financial and business growth at some of these companies are reporting and I think that just speaks to some of the broader volatility we're seeing right now and why it's important to look beyond stock-price and really focused on the underlying business.

Rachel Warren has no position in any of the stocks mentioned. Toby Bordelon owns MercadoLibre. The Motley Fool owns and recommends MercadoLibre. The Motley Fool has a disclosure policy.

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