MercadoLibre is the IBD Stock of the Day for Friday. The so-called Amazon.com of Latin America is looking to build off a 30% year-to-date gain as it finds support at its 21-day moving average. Shares are nearing the formation of a flat base pattern.
Along with a strong year-to-date performance, MercadoLibre's U.S.-listed shares have gained 66% over the past 12 months. MELI has outperformed the S&P 500's 23% year-to-date gain and 34% 12-month gain. On the stock market today, MercadoLibre stock rose a fraction to close at 2079.79.
Founded in Argentina in 1999 and now headquartered in Uruguay, MercadoLibre offers e-commerce and online payments services in 18 countries. The company's largest markets are Brazil, Mexico and Argentina. With a perfect 99 IBD Composite Rating, the company's MELI stock leads Investor's Business Daily's internet retail group of 60 stocks, according to IBD Stock Checkup. The stock is also on the IBD 50 list of premium stocks, as well as the IBD Leaderboard and Sector Leaders lists.
MercadoLibre's Q3 Earnings On Deck
Something to watch for MercadoLibre stock: The tech company's third quarter earning are approaching. The company's investor relations website lists a Nov. 6 date for its Q3 report, though it adds that the timing is "to be confirmed."
MELI stock has had some big swings following its earnings results this year. Shares gapped up 11% following MercadoLibre's strong Q2 results in August, powering the stock's most recent breakout. MercadoLibre also jumped 8% on strong Q1 results published in May.
But shares fell 10% on the company's Q1 report in February when a tax hit pushed MercadoLibre's earnings below Wall Street's expectations.
For its third quarter results, analysts polled by FactSet expects the company's earnings to increase 48% to $10.57 per share. Sales are seen rising 40% to $5.27 billion, according to FactSet.
Overall, MercadoLibre are projecting another year of strong earnings and sales growth for the company. Annual earnings are projected to rise 93% to $37.59 per share in 2024, according to FactSet, after growing 104% in 2023. That's fueled by sales growth of 41% to $20.4 billion, compared to 37.4% in 2023.
One ongoing concern for investors is the impact of the struggling economy in Argentina, where inflation has soared by triple digits. MercadoLibre published data on Oct. 8 it said showed consumption trends in Argentina were improving in recent months after a slowdown at the start of the year. Further, the company said a record 20 million products were sold on its platform in August. MercadoLibre stock gained 2% in trading following the news release.
MercadoLibre Stock: Nearing New Chart Pattern
Meanwhile, MercadoLibre's recent trading action has it working on forming a flat base with a 2,161.73 buy point. But that could be a week away before becoming an official base.
In the meantime, shares are hovering near both the 21-day and 50-day moving averages. A strong move up from those areas could offer an aggressive entry point, including at a recent Oct. 11 high of 2,107.10. But investors could also wait for a base to form and watch for an earnings move.
MercadoLibre stock has a Relative Strength rating of 92 out of a best-possible 99. The score indicates that the company's shares have outperformed 92% of stocks tracked by IBD.
