MercadoLibre, Inc. (NASDAQ:MELI)

CAPS Rating: 4 out of 5

An online trading company which focused on enabling e-commerce and its related services.

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Member Avatar TMFPencils (99.84) Submitted: 3/6/2015 2:29:29 PM : Outperform Start Price: $109.86 MELI Score: -2.84

Dominant position in the South American e-commerce market. Visionary and very experienced leadership at the helm. The company's payment and shipping solutions make its network effect all the stronger and will help thwart efforts of new or outside competitors attempting to enter the region. MercadoLibre is also making a lot of headway boosting its presence in mobile.

I think there's a good reason eBay chose to invest in MercadoLibre (owning 18.4% of the company) rather than directly compete with it.

Overall cash flow and free cash flow production are very much positive and continue to rise each year. This enables the company to invest in product development, acquisitions, and even pay a small dividend.

There are a lot of factors to like with MercadoLibre. The stock will be volatile in the short term thanks to macro/currency issues, but so long as cash flow and its core business continues to grow the stock will eventually follow over the long haul. Outperform.

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Member Avatar Haugurafpeningum (28.81) Submitted: 2/26/2015 1:37:39 PM : Outperform Start Price: $131.32 MELI Score: -4.64

Gene Munster target $165

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Member Avatar lebbins (39.51) Submitted: 1/27/2015 11:06:20 AM : Outperform Start Price: $126.00 MELI Score: -5.10

eBay in latin america. Good market share. Country risk.

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Member Avatar DINEROne (48.18) Submitted: 8/20/2014 10:28:43 PM : Outperform Start Price: $112.49 MELI Score: +4.83

This is the Amazon/Ebay of Latin America. It may be volatile, but I think that over the long term this company is going to outperform in a big way.

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Member Avatar TMFJMo (74.06) Submitted: 7/30/2014 10:38:31 AM : Outperform Start Price: $92.86 MELI Score: +26.36

The middle class is coming! First-mover advantage is proving to be a big deal for the ecommerce king of Latin America and that eBay still holds 18.5% of the shares is very telling indeed. Many ways to make their money and the model is working. Gotta be long this stock.

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Member Avatar TMFBuild (47.48) Submitted: 7/24/2014 10:03:59 AM : Outperform Start Price: $90.29 MELI Score: +31.11

MercadoLibre works superbly on a free-market model growing in six Latin American countries. Intelligently, the company entered into a strategic alliance with eBay to keep one of the biggest players at bay. MercadoLibre has done very well in terms of both revenue and earnings in past seven years, including the recession years. The revenue stream is also diversified. The Internet penetration in Latin American countries is still less than 50% on average. Rising disposable income and a growing middle class provide huge scope of growth. The ROIC and net profit margin for the past five years have been 33% and 25%, respectively. So it can afford aggressive marketing if, in the future, new players enter the market. And there is a bonus: It pays small dividend! In spite of such an outstanding performance, the company is trading relatively cheap.

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Member Avatar TMFBwithbike (70.65) Submitted: 7/4/2014 9:31:37 PM : Outperform Start Price: $95.77 MELI Score: +23.00

A bet on the economic growth of Central and South America.

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Member Avatar TMFCheesehead (75.35) Submitted: 4/17/2014 11:28:54 PM : Outperform Start Price: $85.60 MELI Score: +31.73

Worth re-upping on this dip. Currency fluctuations come and go, the business is here to stay.

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Member Avatar Qsinger47 (< 20) Submitted: 4/16/2014 5:09:48 PM : Outperform Start Price: $84.51 MELI Score: +33.07

Growth opportunities in South America. Once their economies recover a bit, this stock will start to move up.

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Member Avatar L8starter (77.11) Submitted: 3/17/2014 7:11:18 AM : Outperform Start Price: $97.11 MELI Score: +14.42

Latin America's e-bay. Top dog in industry. Excellent LTD/equity = 0.03, steady revenue growth, steady dividend increase. Victim of temporary capital flight from emerging markets. ~30% off high because of emerging market fears. Excellent chance to take advantage of emerging market fears. Invest while others are fearful.

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Member Avatar surabayajhonny (46.73) Submitted: 3/15/2014 8:38:21 PM : Outperform Start Price: $97.11 MELI Score: +14.42

The worst is priced into the stock.

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Member Avatar GreenChilePepper (21.20) Submitted: 2/25/2014 11:33:13 PM : Outperform Start Price: $89.43 MELI Score: +24.87

Exchange rates have given us a discount on this growing company that continues to thrive.

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Member Avatar kmpusa (< 20) Submitted: 2/8/2014 8:54:49 AM : Outperform Start Price: $94.82 MELI Score: +13.82

MELI is sitting in a space without much competition and will continue to grow. The stock is primarily depressed on worries of currency fluctuation.

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Member Avatar ayaghsizian (98.25) Submitted: 1/25/2014 3:55:38 PM : Outperform Start Price: $90.99 MELI Score: +18.79

Why didn't I pick this company years ago when it was $15? This has tremendous potential over the next 20 years and I believe eBay still owns 19.5% of the company which should help future growth. Now I have to buy less shares at $95 per share. With proper guidance and management which I hope they do have, there is every reason to believe they will be huge in the future. Same thesis for PSMT by the way.

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Member Avatar Richiedebo (56.21) Submitted: 1/14/2014 11:56:16 PM : Outperform Start Price: $95.95 MELI Score: +15.06

Stock is another eBay. Underperforming big time Not bad company.

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Member Avatar Seattleldg (54.25) Submitted: 1/8/2014 6:56:04 PM : Outperform Start Price: $99.91 MELI Score: +10.02

A great business in a rapidly growing region of the world.

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Member Avatar bostonbear (91.83) Submitted: 12/31/2013 8:42:22 AM : Outperform Start Price: $106.34 MELI Score: +2.65

I missed eBay... not going to miss this one.

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Member Avatar TMFBuck (90.80) Submitted: 12/12/2013 5:37:12 PM : Outperform Start Price: $104.47 MELI Score: +1.21

We've seen this play out before with eBay. Two great businesses here with low debt, very little capital expenditures and a well known brand.

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Member Avatar dstwhit (72.53) Submitted: 11/14/2013 8:05:58 AM : Outperform Start Price: $109.93 MELI Score: -4.53

near monopoly position; growth thru increased internet access in L.A.; temp drop due to currency valuation

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Member Avatar TMFInnovator (74.51) Submitted: 11/13/2013 10:13:59 AM : Outperform Start Price: $110.43 MELI Score: -6.24

MercadoLibre keeps getting referred to as "the Ebay of Latin America".

Just in case "they" are right, I ran a comparison of MELI with EBAY. I assumed MELI would mimic EBAY in as many ways as possible. Then I compared its valuation to its current market cap.

Long story short, MELI's valuation would be worth $23 billion once mature --- or roughly $518 per share. At today's price of $110, that's a boatload of upside.

Whether or not the prognostication is accurate, the message was clear that this stock should continue to be en fuego. Outperform.
____________________________________________________

http://boards.fool.com/1069/breakout-30862960.aspx?sort=whole#30863332

(9/9/2013 on the RB boards)

This was kind of an interesting article that I reference just to keep things in perspective:

http://pulsosocial.com/en/2013/08/01/e-commerce-in-latin-ame...

- e-commerce in Latin America (as a whole) will be approximately $69 billion this year
- e-commerce in the US will be approximately $200 billion this year

EBAY has a similar business model as MELI and sports a market cap today of $68 billion. The total e-commerce market in Latin America is roughly 1/3 that of the US.

IF MELI were to find a way to become "the EBAY of Latin America" (everyone's favorite saying these days) and mimic EBAY's operations in every way possible (% share of the total e-commerce market, % margins, etc), they could expect their fundamentals to be roughly 1/3 of EBAY's as well. Or, said another way, their top and bottom lines would be 1/3 as large.

And if the market applied the same valuation to MELI's fundamentals as they do to EBAY's, MELI could have a market cap ~ $23 billion (1/3 * $68b).

Based on today's market cap of $5.7b, that would imply a 300% upside -- or a potential price of $518 per MELI share.

I know that this analysis is simplistic and inherently flawed. And I'm happy to hear any thoughts/opinions/outspoken verbal attacks about my assumptions (one of the largest being that MELI could sell to all of Latin America). But my bottom line is that if MercadoLibre can continue to grow, the Latin American e-commerce market can support plenty of upside for them. $128/share could seem like nothing, a few years down the road.

-Simon
Long MELI

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