Latin American e-commerce giant MercadoLibre (MELI 1.96%) delivered a strong first-quarter earnings report last week. Revenue climbed 35% to $3 billion and earnings skyrocketed 205% to $3.97 per diluted share. Those results are particularly impressive in light of the challenging economic environment, but MercadoLibre still has a long runaway for growth.

Latin America has one of the fastest-growing internet penetration rates in the world, paving the way for strong consumer adoption of e-commerce and digital payments, as well as corporate adoption of digital advertising. Those tailwinds could translate into fivefold returns for MercadoLibre shareholders over the next decade. That means $200,000 invested in the stock today could be worth $1 million by 2033.

Here's what investors should know.

MercadoLibre dominates e-commerce in Latin America

MercadoLibre is often described as the "Amazon of Latin America." That comparison is imperfect, but it does convey the strong competitive position and brand authority MercadoLibre has cultivated in the region. In fact, the company runs the largest online commerce and payments ecosystem in Latin America. Its marketplace receives nearly four times as many visitors as its closest rival, and it accounted for 20.9% of regional e-commerce sales in 2022.

Better yet, MercadoLibre is expected to account for 21.6% of regional e-commerce sales in 2023, according to eMarketer. In other words, the company is still gaining market share. That momentum hints at a powerful network effect. Sellers are drawn to the marketplace with the most buyers because it has the greatest purchasing power, and buyers are drawn to the marketplace with the most sellers because it offers the greatest selection. Each new marketplace participant adds momentum to that virtuous cycle, which should keep MercadoLibre ahead of the competition for the foreseeable future.

That portends strong growth in the coming years. E-commerce currently accounts for just 11% of total retail sales in Latin America, but that figure is expected to reach 20% by 2026.

MercadoLibre has several booming side businesses

MercadoLibre has reinforced its leadership in e-commerce with adjacent solutions. It provides logistics services through its Mercado Envíos subsidiary, and its expansive fulfillment footprint allows the company to offer faster shipping than any competitor. That makes its marketplace a more compelling option for buyers and sellers, accelerating the underlying network effect.

MercadoLibre also offers digital advertising solutions through its Mercado Ads subsidiary. As the operator of the most popular online marketplace in Latin America, MercadoLibre has two things every advertiser values: Engaged consumers and shopper data. Mercado Ads makes use of those assets, and the business is booming. Ad revenue soared 62% in the first quarter, and that momentum should persist in future quarters. Latin America is currently the fastest-growing digital ad market in the world.

Finally, MercadoLibre offers a broad range of fintech products. That includes business loans, consumer loans, and credit cards through its Mercado Crédito subsidiary, as well as payment processing and digital wallet services through its Mercado Pago subsidiary. Those financial services capitalize on the low bank account and debit card penetration rates in Latin America, and its fintech business is booming. Mercado Pago is the third most popular digital wallet among Latin American consumers, and fintech revenue increased 40% in the first quarter.

MercadoLibre shareholders could see fivefold returns by 2033

Retail e-commerce sales in Latin America are excepted to increase at 14% annually through 2027, and digital payment volume is expected to increase at 15% annually over the same period, according to Statista. Those tailwinds could translate into fivefold returns for MercadoLibre shareholders.

MercadoLibre currently has a market capitalization of $61 billion. That figure would need to increase at 17.5% annually to quintuple by 2033. That seems feasible in light of the company's growing addressable market, and the fact that its market capitalization increased 32% annually over the last five years.

With that in mind, if MercadoLibre can grow revenue at 20% annually over the next decade -- a reasonable assumption given its annual revenue growth of 54% over the past five years -- its market capitalization could increase fivefold, while its price-to-sales ratio drops to 4.4 times sales, a more reasonable multiple than its already reasonable valuation of 5.8 times sales. That makes this growth stock a screaming buy.

I'd like to offer one final caveat. Very few people have the financial means to safely invest $200,000 in a single stock. Investors should never sacrifice portfolio diversity in the pursuit of big gains. But the prospect of fivefold returns is compelling regardless of the initial amount invested.