The market's performance so far in 2025 is a great real-time lesson in market dynamics. After starting off an a positive note, it plunged after a black swan event, finally rebounding on strong economic sentiment. Such is investing in the stock market: Be prepared for a roller-coaster ride, but ultimately, strong companies drive the market higher overall.
Given these market dynamics, you want to have a well-diversified portfolio of stocks in many categories and classes to protect your investments under varying conditions. However, if I had to pick only one stock to own, it would be one that crosses multiple categories and checks an array of boxes. I would choose MercadoLibre (MELI -0.94%). Here's why.
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Growth: Check
If I could only hold one stock, I would want to be confident in its performance. MercadoLibre, which is an e-commerce and fintech powerhouse, has been delivering strong and profitable growth for years. It recently released 2025 second-quarter earnings, which were a continuation of this growth story.
Here are some highlights:
- Revenue increased 53% year over year (currency neutral).
- Gross merchandise volume (GMV) was up 37%.
- Total payment volume (TPV) was up 61%.
- Items sold increased 31%.
MercadoLibre has the most e-commerce market share in all of its main markets. One of its major growth drivers is unique active buyers, which increased 25% year over year. It's generating a shift from offline to online by creating an attractive value proposition for new buyers, and each new buyer is a new source of long-term value for the company's e-commerce platform.
The company is investing in speed, which will always be an important focus in e-commerce, but it's also gathering interest and generating sales by offering a large selection of shipping options. There's been growth in its paid delivery for orders under $79, which are free for slow shipments but have a fee for fast delivery, as well as high engagement with its Meli+ membership program, which offers the choice of a weekly delivery day.
Monthly active users in the fintech segment increased 30% year over year to 68 million, and the number of high-frequency users also consistently increases. The company's strategy is to offer high-yield savings accounts, which management sees as the equivalent of free shipping in e-commerce. It attracts new business and converts many cash users to the digital platform, bringing huge amounts of funds into the MercadoLibre ecosystem.
Opportunity: Check
MercadoLibre's future opportunity is still enormous. E-commerce in its region lags behind the U.S. by a decade, with penetration at only 15.2%. It has at least the same opportunity in fintech, if not more, since many of its regions are underbanked. In Mexico, for example, only half of the population has a bank account.
The company also has a huge opportunity in advertising and media. The retail media market is expected to increase threefold by 2028.
MercadoLibre is a top player here with its formidable marketplace that offers exposure to millions of shoppers. It recently integrated Alphabet's Google ad manager into its platform, which it expects to simplify ad management for for its advertisers.
Efficient management: Check
Management aims to strike the right balance between investing for growth and maintaining profitability, which is a crucial strategy for growth companies. Some quarters are more profitable than others, but it typically reports healthy margins and profits.
Operating margin dropped from 14.8% last year to 12.2% in the second quarter, and net income dropped from $531 million to $523 million. Management attributed this to taxes and currency fluctuations.
Value: Check
With its large opportunity and reliable profits, MercadoLibre looks like a no-brainer stock. On top of that, it trades at the reasonable valuation of 36 times forward, one-year earnings. That's an attractive level for a company with as much potential as MercadoLibre.
In sum, MercadoLibre has almost everything an investor could want in a great stock and offers years of shareholder value.
