Player Avatar adamlevy (71.58) Submitted: 11/28/2012 12:56:53 PM : Outperform Start Price: $69.75 MELI Score: +36.93

The leader in the Latin American online retail market. Get's about three times as many visitors per month than Amazon does in the regions it operates. Operates more like eBay than Amazon, which keeps margins high. Simply, it takes the best, most profitable aspects of commerce websites, and successfully integrates them into its own website, e.g. MercadoPago = PayPal.

The Latin American market has a lot of potential for growth, with only 40% internet penetration. Internet access is growing at a phenomenal rate in the region, so it won't take long for the company to realize this potential. Online commerce is huge in the area, it's estimated Chile does more business online per capita than the US.

Earnings misses don't concern me. ROE is good, and debt levels are minimal. The earnings growth is still fantastic, and I believe the P/E multiple is justified by the growth potential. It has a lower PEG than eBay. It's also trading at a discount to its historical P/S ratio.

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