This company might even beat the Amazon share price over the next few years

The Amazon share price is pretty synonymous with e-commerce investments, but I think there’s a more appealing company out there.

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When it comes to e-commerce investing, the Amazon share price often steals the spotlight. But savvy investors might want to shift their gaze southward to a Latin American powerhouse that’s been quietly outperforming its North American counterpart. Enter MercadoLibre (NASDAQ: MELI), the Amazon of Latin America, that’s been writing its own success story.

A market darling in the making

While Amazon has long been a staple in many investment portfolios, MercadoLibre has been turning heads with its stellar performance. The shares have surged an eye-popping 51% over the past year. This isn’t just a flash in the pan – the company’s growth trajectory has been consistently impressive.

Recent financial results tell a compelling story. In its most recent quarter, the company reported earnings per share of $10.48, demolishing analyst estimates of $8.53. This 23% earnings surprise isn’t an anomaly – it’s part of a pattern of exceeding expectations that’s become the firm’s hallmark.

Revenue growth has been equally impressive, with the company reporting $5.07bn in its latest quarter, up from $3.05bn in the same quarter last year. This 66% annual revenue growth showcases an ability to capture market share and expand its operations in a region ripe for e-commerce expansion. Management expect this to continue into the future, with 24% annual earnings growth forecast for the next three years.

More than just an e-commerce play

While Amazon has diversified into areas like cloud computing, MercadoLibre has also carved out its own unique ecosystem. The company’s fintech arm has been a particular bright spot, with overall fintech business revenue growth of 44% year on year. In Brazil, a key market, the firm’s active fintech users increased by a staggering 46%, outpacing local competitors.

This dual focus on e-commerce and financial technology positions the company at the intersection of two high-growth sectors, potentially offering more diverse revenue streams and growth opportunities compared to Amazon’s model.

Challenges to consider

Of course, no investment is without risks. The company operates in a region known for economic volatility and regulatory challenges. The company’s rapid growth in lending could expose it to credit risks, particularly if economic conditions in its key markets deteriorate.

Additionally, with a price-to-earnings ratio of 76.11 times, the shares aren’t cheap by traditional valuation metrics. Investors are clearly pricing in significant future growth, which the company will need to deliver to justify its current valuation. A discounted cash flow (DCF) suggests the shares are only about 3% undervalued at present.

The Foolish bottom line

While Amazon remains a formidable force in global e-commerce, I’d say that MercadoLibre offers investors exposure to a rapidly growing market with significant untapped potential. Its strong financial performance, innovative fintech offerings, and dominant position in Latin American e-commerce make it an compelling alternative for investors looking to diversify beyond the usual tech giants.

For investors willing to look beyond the familiar names in e-commerce, MercadoLibre could offer a unique opportunity to tap into the next wave of digital commerce and fintech growth. I’ll be buying shares at the next opportunity.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Gordon Best has positions in MercadoLibre. The Motley Fool UK has recommended MercadoLibre. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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