In a quarter when many companies issued cautious guidance or reported lackluster earnings, two that knocked it out of the park were Airbnb (ABNB -0.95%) and MercadoLibre (MELI 0.29%). Neither company disappointed with their most recent results, and yet their stocks remain cheap from a valuation standpoint.

Even though both stocks saw success to begin 2023, there's a lot more in store. Read on to find out why these two have strong potential for the rest of the year and beyond.

1. Airbnb

Airbnb has become synonymous with alternative lodging and experiences. Whether you're crashing in someone's basement for a few months while you get established in a new city or want to rent out an entire beach house, Airbnb is the place to go. Travelers are also flocking to the platform in record numbers: The fourth quarter saw the highest number of active bookers ever on the platform.

All this growth translated into record Q4 revenue of $1.9 billion, up 24% over last year. Airbnb is also becoming quite profitable, putting up a 17% net income margin in the fourth quarter and a 23% profit margin for the whole year.

To slam the door shut on the notion that Airbnb would struggle during an economic downturn, management guided for about 19% growth in Q1 with similar profit margins. Although consumers are still having their pocketbooks squeezed by inflation, it seems Airbnb has maintained its position among travel companies as a go-to booking site.

The stock is also reasonably priced based on its price-to-free-cash-flow ratio, especially considering its revenue growth rate.

ABNB Price to Free Cash Flow Chart

ABNB Price to Free Cash Flow data by YCharts

As Airbnb carries momentum into 2023, I wouldn't be surprised if the stock continues outperforming its competitors.

2. MercadoLibre

To sum up MercaboLibre's business model, it combines essential elements of Amazon and PayPal and offers those services to several Latin American markets. MercadoLibre has been a top performer for a long time, and the fourth quarter was no exception.

On its commerce side, gross merchandise volume grew a currency-neutral 35% year over year, with items sold rising 11%. It also delivered 94% of the items ordered on its platform, with 51% of those delivered on the same or next day. Combined, this led to solid commerce growth, with revenue increasing 36% to $1.7 billion. In a market where many commerce companies are experiencing growth challenges, MercadoLibre stands in stark contrast.

But that's not even its most promising segment. Its fintech wing, which includes consumer credit, digital wallets, and online payment tools, has displayed remarkable growth over the past year.

Quarter Revenue Currency-Neutral Fintech Revenue Growth (YOY)
Q1 $0.97 billion 113%
Q2 $1.19 billion 107%
Q3 $1.23 billion 115%
Q4 $1.34 billion 93%

Data source: MercadoLibre. YOY = year over year.

In Q4, MercadoLibre grew its overall revenue by 56% on a currency-neutral basis. It's important to examine the company through a currency-neutral lens, as the currency fluctuations in Latin American countries can be quite extreme.

MercadoLibre also saw its profit margin expand from a 2.2% loss in the year-ago period to a 5.5% profit this year. With the revenue and profits side of MercadoLibre's business proliferating, the stock remains one of the best growth stocks available.

However, the shares are relatively cheap on a historical price-to-sales (P/S) basis.

MELI PS Ratio Chart

MELI PS Ratio data by YCharts

When a stock's valuation decreases, it's because sentiment has changed or a business model has shifted. However, MercadoLibre's growth has remained elevated despite its cheap P/S valuation.

Given MercadoLibre's inexpensive valuation, the stock has incredible potential for 2023 and beyond. Moreover, I believe it can be one of the top-performing stocks via multiple expansion and revenue growth.