Successful investing involves patiently holding shares in a growing business -- that's all there is to it. But sometimes, market pullbacks create rare opportunities to buy shares in a competitively positioned business at a valuation that may underestimate its future growth, setting up even better returns for patient investors.
MercadoLibre (MELI 5.20%), Coupang (CPNG 1.23%), and Airbnb (ABNB 4.27%) are three such stocks that are currently underappreciated by the market. Here's why investors may want to consider adding these top stocks to their portfolio.
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1. MercadoLibre
Shares of MercadoLibre are up more than 1,500% over the last 10 years, but the stock's pullback has brought its valuation down to the lowest level in years. This is a consistent high-growth business that is dominating Latin America's e-commerce and fintech markets, presenting a compelling investment opportunity.
Its competitive moat is based on the combination of valuable services it offers to customers: payments, credit, and membership benefits that drive higher loyalty and shopping frequency. These services, along with its growing advertising business, boost the company's profits, which it can reinvest in improvements to the customer experience, creating a powerful flywheel effect.
NASDAQ: MELI
Key Data Points
Revenue rose 45% year over year in the fourth quarter. Unit shipping costs fell in Brazil, one of its top markets, by 11% year over year, driven by automation.
The company's profit margin dipped over the past year, which may explain the stock's pullback. Still, MercadoLibre will continue to see its margins trend higher over the long term as it expands its high-margin fintech services and invests in automation that lowers costs.
This opportunity is why the stock might be undervalued. The shares are trading at a price-to-sales multiple (P/S) of 3.1, the lowest in more than 10 years.
2. Coupang
Coupang is the leader in South Korea's e-commerce market, and it's starting to show the potential to profitably expand into other countries, such as Taiwan. The stock has fallen 21% year to date and now trades at a sales multiple of about 1. This values the company at just one year of revenue but leaves attractive upside over the next several years as it grows and improves margins.
Coupang has invested billions over several years in its fulfillment network and logistics operations. It differentiates itself from a global leader like Amazon by specifically designing its service to efficiently deliver packages in densely populated cities, including tall apartment buildings. This allows the company to deliver most orders in Korea through its Rocket Delivery service within hours.
NYSE: CPNG
Key Data Points
It reported triple-digit revenue growth in Taiwan last quarter, demonstrating that its business model can be successfully adapted to other highly populated areas outside its home market.
The stock is down after fourth-quarter revenue growth decelerated to just 11% year over year -- significantly down from the previous quarter's 18%. This was caused by a data breach that stalled its momentum, as customers had to reset their passwords. But with management noting a recovery at the start of the year, this pullback appears to be a buying opportunity.
3. Airbnb
Airbnb started in its founders' San Francisco apartment in 2007 and has grown into a global platform serving over 5 million hosts and more than 2.5 million guests. The stock has been range-bound the past several years, but the company has continued to grow, and the stock is now offering solid value, trading at just 18 times free cash flow.
The company is serving a growing industry. A 2025 report from the World Travel & Tourism Council showed that travel spending was expected to contribute about 10% to the global economy last year. It's a multitrillion-dollar market with ample long-term potential for Airbnb.
NASDAQ: ABNB
Key Data Points
Airbnb benefits from a capital-light model, generating revenue from fees, and it doesn't have to spend money on facility maintenance, like large hotel chains do. This allows management to convert its $12.3 billion in annual revenue into $4.6 billion in free cash flow, a high free-cash-flow margin of 37%.
Investments in artificial intelligence (AI) could drive margins higher. The company created a custom AI agent, which is currently handling about a third of customer support issues. And it draws on a huge pool of data, including 200 million verified identities and 500 million reviews, which competitors can't replicate.
Airbnb has a strong brand, unique destinations for guests, and solid prospects in a growing industry. Its modest valuation should set up favorable prospects for investors.
