MercadoLibre (MELI -4.21%) operates in many countries with terrible economic outlooks. And many people might question whether persistent inflation, rising interest rates, and slowing economic growth in the company's largest markets of Brazil, Argentina, and Mexico will eventually significantly impact the company's operation. Consequently, you might wonder whether investing in the company in such an unstable economic environment is worth the risk.

Here are two reasons why you should consider buying MercadoLibre today.

A delivery person holds two boxes.

Image source: Getty Images.

1. MercadoLibre has growing revenue, profitability, and free cash flow

Despite the harsh economic environment, the company recently produced almost $2.6 billion in its second quarter of 2022, exceeding Zacks consensus estimates of $2.5 billion. Revenue growth was 53% year over year in U.S. dollars and 57% when neutralizing the impact of foreign currency exchanges. Very few e-commerce or fintech companies are growing revenue as rapidly as MercadoLibre in the current environment.

You can see MercadoLibre's outperformance when comparing its  revenue growth to many popular worldwide online retailers and fintech companies on a trailing-12-month basis. Many analysts use the trailing 12 months as a way to neutralize the effect of seasonality. And the metric is often considered the best way to make a like-for-like comparison of two or more companies' performance trajectories.

MELI Revenue (TTM) Chart

MELI Revenue (TTM) data by YCharts

Most importantly, MercadoLibre's revenue growth is dropping to the bottom line. The company produced second-quarter 2022 earnings of $2.43 per share, growing 77.4% year over year and beating the Zacks consensus estimate by 44.6%. That's excellent in a market where investors value increasing profitability.

Amazingly, out of all the popular e-commerce and fintech companies that have reported second-quarter earnings so far, MercadoLibre is the only one growing its EPS on a trailing-12-month basis.

BABA EPS Diluted (TTM) Chart

BABA EPS Diluted (TTM) data by YCharts

MercadoLibre produced free cash flow (FCF) at the end of June quarter of $807 million and $1.08 billion on a trailing-12-month basis. Of the companies that reported second-quarter earnings, MercadoLibre is substantially outpacing peers in growing its FCF.

MELI Free Cash Flow Chart

MELI Free Cash Flow data by YCharts

2. Its business operations are resilient  

There are two reasons why MercadoLibre has such a robust business.

First, MercadoLibre management has learned to operate under terrible conditions since its inception. Marcos Galperin founded the company in 1999 in Argentina during the Argentine Great Depression, which lasted from 1998 to 2002.

Since 2002, MercadoLibre has changed from managing deflation to managing extreme inflation. Although the current U.S. inflation rate of 9.1% is considered a record high, the Argentine inflation rate has only been below 9% four times since 2002. Furthermore, the inflation rate in Argentina averaged 46.95% from 2017 until 2022 and reached an all-time high of 65.5% in June 2022. Yet, despite inflation headwinds and Argentina's interest rates at 52% in June, MercadoLibre grew its second-quarter revenue in the country 104% year over year.

Whether in the worst economic downturn or significant periods of inflation, MercadoLibre has survived and thrived in many Latin American countries under economic conditions that would have made most U.S.-based companies wilt. 

MercadoLibre is also resilient against competition. Its primary advantage against other e-commerce companies is that it provides the most extensive set of integrated digital and technology-based tools for businesses and individuals to trade products and services in Latin America.

The best way to think of MercadoLibre is as a combination of AmazoneBayPayPal HoldingsBlockShopify, Craigslist, and Zillow Group. And yes, MercadoLibre sells real estate just like Zillow does in the U.S. -- it is the No. 1 real estate website in Mexico.

The company's numerous services offer merchants and buyers many entry points into its set of sticky, intertwined solutions. And as each new user joins the ecosystem, it becomes increasingly valuable to existing users -- making it difficult for competitors to peel away MercadoLibre's customers and merchants.

There are still huge risks

Although MercadoLibre sells near a historically low price-to-sales ratio of 5.8, the valuation still might be too high if a worldwide recession occurs. While MercadoLibre is recession resistant, it is not immune. A worldwide recession could significantly impact retail demand in South America and hurt the company. In June, Citigroup estimated the chances of a global recession at 50%. And it would be best if you were not blind to this risk.

However, MercadoLibre is perhaps the best e-commerce website in the world, and it may be a long time before investors see its valuation this low again. Therefore, if you are a bit of a risk-taker and looking for a solid investment, few companies are better than MercadoLibre.