The holiday shopping season has begun, and with it, the biggest time of year for retailers, e-commerce companies, and other consumer-facing brands.

After a challenging 2022, most retailers and e-commerce companies are looking for all the help they can get. E-commerce stocks, especially, have been hit hard this year as a combination of difficult comparisons with the pandemic boom in 2021, a consumer shift away from discretionary goods, and macroeconomic headwinds have translated into weak results from the online retail sector.

However, there's one exception to the rule. MercadoLibre (MELI 0.53%), the Latin American e-commerce marketplace, has continued to deliver strong results even as its stock has fallen alongside its peers, down 34% this year. 

Let's take a closer look at why MercadoLibre is a top stock to buy right now.

Strong growth and ramping up profits

At a time when major U.S. e-commerce companies like AmazonEtsy, and Wayfair are reporting single-digit or even negative growth, MercadoLibre has been rock-solid.

In the third quarter, the company reported 61% revenue growth to $2.7 billion, with e-commerce gross merchandise volume (GMV) up 32% to $8.6 billion and total payment volume from its digital payments business, Mercado Pago, surging 76% to $32.2 billion.

Even as Latin America has experienced the same reopening from the pandemic as the U.S., MercadoLibre has continued to gain market share. Mercado Pago also benefits from its placement with brick-and-mortar stores through mobile point-of-sale (mPOS) devices, and it sold nearly 1 million mPOS devices in the quarter, allowing thousands of merchants to take credit card payments. In the third quarter, off-platform payments volume was up 122%, showing that category is still seeing huge growth.

MercadoLibre's most recent update also shows the company continuing to take market share and deliver strong growth. During the Black Friday promotional week from Nov. 21 to Nov. 27, its Brazilian e-commerce business, Mercado Livre, which makes up roughly half its gross merchandise volume, reported 19% gross sales growth, with Mercado Pago posting a 38% jump in gross sales. That compares with an overall decline of 23% in Brazilian e-commerce.

In addition to its top-line growth, MercadoLibre is also seeing profits ramp up, a sign that its flywheel business model, which combines features like e-commerce, payments, logistics, and financing, is scaling successfully. Operating income jumped 85% to $296 million, giving the company an 11% operating margin, driven by a 670-basis-point jump in gross margin to 50.1%.

Competition is fading

Latin America is a large market, so it's not surprising that MercadoLibre has attracted some deep-pocketed competitors in Brazil, including Amazon and Sea Limited's Shopee.

However, both of those companies are flailing while MercadoLibre continues to step on the accelerator. Amazon's international e-commerce business has lost more than $5 billion through the first three quarters of the year, and while Amazon has invested significant resources in Brazil, the company is now cutting costs. It appears to be reeling back spending on money-losing ventures, so Brazil is likely to become less of a priority.

Sea Limited's Shopee is growing fast in Brazil, but also bleeding cash, with an adjusted EBITDA loss of $1.03 per order in Brazil. Sea Limited stock has plunged this year as growth has slowed and losses have mounted, with Shopee posting an adjusted EBITDA loss of $495.7 million in just the third quarter. Like Amazon, Sea has announced layoffs, and more cost-cutting seems to be in its future given the size of those losses and the investor response.

Overall, MercadoLibre is grabbing market share, ramping up profitability, fending off powerful competitors, and growing in a challenging environment. With the stock down by more than 50% from its pandemic peak in 2021 and momentum already building in the holiday season, MercadoLibre looks well positioned to continue outperforming the market.