The major market averages are trading nicely higher this year, but we know that a lot of investors have had a rough time making money in 2021. Many growth stocks have been hit hard over the past year, and even many of the market's value stocks have gotten cheaper.
MercadoLibre (MELI 4.05%), Twilio (TWLO 5.14%), and China Life Insurance (LFC) are three stocks that have faltered for investors this year, tumbling more than 20% in 2021. Let's see why they are prime candidates to bounce back in the coming year.
Latin America's leading online marketplace operator keeps getting bigger, with 78.7 million unique active users across its integrated ecosystem. Its namesake e-commerce platform sold 259.8 million items during MercadoLibre's latest quarter, a 26% increase. Gross merchandise volume of $7.3 billion is a 30% year-over-year increase on a foreign-exchange-neutral basis. This translates into an increase of just 24% in U.S. dollars -- given the historically rampant inflation of the region -- but it's actually the slowest-growing business in the MercadoLibre arsenal.
Its Mercado Envios fulfillment arm saw its shipments increase 32% to 247.8 million items. Mercado Pago -- Latin America's online payment platform of choice -- saw its payment volume soar 44% in U.S. dollars and 59% on a foreign-exchange-neutral basis to hit $20.9 billion. Do you see how Mercado Pago's transactions are nearly three times what's happening on the original e-commerce marketplace? This is a big bet on fintech and e-commerce. Throw in smaller but much faster-growing segments specializing in asset management and credit, and you see a company with total net revenue soaring 67% in its latest quarterly report. Operating profit, pre-tax income, and net earnings are all growing even faster.
How is this company trading 27% lower in 2021 through Wednesday's close? Fintech stocks have been hit hard this year, and the international nature of MercadoLibre's business is making some investors skittish. Lost in the drawdown is that MercadoLibre has trounced Wall Street's profit targets in back-to-back quarters, and even slowing growth at the company makes it a speedster relative to stateside peers.
Another 2021 sinker that has me scratching my head is Twilio. When you hail a ride from a car-sharing service, chat with a vacation property owner to secure a holiday booking, or have groceries delivered, there's a good chance that you're going through one of Twilio's in-app communication solutions. Bringing a pair of picks from this article together, MercadoLibre uses Twilio to protect 90% of its sellers through Twilio authentication solutions.
The stock is down 21% year to date, and it's another one coming through with monster growth in its latest financial update. Revenue rose 65% in Twilio's latest quarter, up a still-impressive 38% on an organic basis. Developers who come to Twilio tend to spend more as time goes by. Twilio's dollar-based net expansion rate of 131% means that returning customers are spending 31% more on the platform than they were a year earlier. This is a combination of Twilio doing a good job in getting customers to add more modules as well as the usage-based success of the developer apps once they're using Twilio's tools to become more engaging.
China Life Insurance
Investors have been storming out of Chinese growth stocks in 2021, and rightfully so. A lot of things have happened in the world's most populous country to make the rest of the planet think twice about putting money to work in China. We've seen regulators crack down on what for-profit educators and online gaming companies can do. We've seen some of the largest tech companies have to write checks as large as $15 billion to the government in support of "shared prosperity" initiatives.
If there's a publicly traded company that could be immune to many of these changes, one would have to argue that China Life Insurance should be near the top of the list. It offers annuity products along with life, accident, and health insurance products. There are more than 322 million policies currently in force.
It's not entirely clean in terms of shared prosperity, as not everyone in China can afford life insurance. However, life insurance doesn't need to deal with tech's censorship issues. It also doesn't have to fret about recent moves curbing access to online games and after-school tutoring with China's youth.
There are delisting fears inherent in Chinese equities, but it's hard to find a cheaper stock right now. China Life Insurance is trading for less than six times trailing earnings, and its annual dividend translates to a healthy 6.1% yield. Good luck finding that with the leading U.S. insurance stocks.