MercadoLibre Is a Bottle Rocket

There's a school of thinking that sees more promise in superior gains than in digging up great starting prices, even if you seem to be overpaying for that bottle rocket. Richard Driehaus, the godfather of momentum investing, takes exception to buying low and selling high: "I believe that far more money is made buying high and selling at even higher prices." And our Motley Fool Rule Breakers analysts would agree with that: Momentum-like criteria show up twice in the six pillars of that newsletter's strategy.

Price momentum may not be a traditional marker of a strong business or a capable management team, but when you think about it, those qualities should eventually generate strong returns. This is just a slightly backward way of looking at the numbers, throwing "cause" and "effect" into the same basket to find a starting point for more research.

So what kind of bottle rockets can we find today? I took that question to our CAPS screener, looking for stocks that have at least doubled from 52-week lows and are still within 10% of yearly highs.

One stock that caught my eye among the resulting 127 tickers today is MercadoLibre (Nasdaq: MELI). If you bought shares of the e-commerce specialist 52 weeks ago, you're sitting on a massive 111% gain today. It's been nothing but blue skies ahead since November 2008, and the stock looks set to explore new highs -- again and again.

Here's how MercadoLibre's gains stack up against some direct rivals over the last year:

Source: Motley Fool CAPS.

Past performance is no guarantee of future results, and you should always do more research after finding a promising stock by screening. In this case, MercadoLibre is far and away the leader in e-tail operations in Central and South America, and the region as a whole is climbing to its feet after decades in the global gutter.

Brazil isn't a part of the famed BRIC hypergrowth bloc of nations for nothing, and the largest market in Latin America is setting the tone for an entire continent. As quality of life improves and Internet use catches on in this developing zone, MercadoLibre stands uniquely positioned to reap the benefits of this economic resurgence.  

Buy now or forever hold your peace: This bottle rocket still has plenty of dry powder left in its growth engines.