Investment Insights: MercadoLibre and Toast as Growth Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 28 2026
0mins
Should l Buy MELI?
Source: Fool
- MercadoLibre Growth Momentum: Currently, MercadoLibre's stock is down 34% from its all-time high, yet it achieved a 45% year-over-year revenue growth in Q4 2025, marking its 28th consecutive quarter of over 30% growth, demonstrating a strong business flywheel effect, and despite trading at its lowest price-to-sales ratio since the Great Recession, it is still seen as a prime investment opportunity.
- User Growth and Market Share: The fintech user base for MercadoLibre grew by 27% in Q4, reaching 78 million users, which propelled a 37% increase in gross merchandise volume on its platform, indicating that the synergy among its various business segments is strengthening, further solidifying its leadership position in the Latin American e-commerce market.
- Toast's Profit Potential: In Q4 2025, Toast's annual recurring revenue (ARR) hit $2 billion, growing 26% year-over-year, with its subscription software solutions boasting a gross margin of 70%, showcasing strong growth potential in the restaurant technology sector; although initial customer acquisition impacts profits, it is expected to convert into a long-term profitability advantage.
- Market Competition and Valuation: Toast's stock has fallen nearly 50% from its highs, currently trading at 2.5 times sales; despite facing fierce market competition, management believes it has a path to achieving $10 billion in ARR, indicating an optimistic growth outlook in the restaurant industry.
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Analyst Views on MELI
Wall Street analysts forecast MELI stock price to rise
11 Analyst Rating
10 Buy
1 Hold
0 Sell
Strong Buy
Current: 1666.930
Low
2500
Averages
2783
High
2950
Current: 1666.930
Low
2500
Averages
2783
High
2950
About MELI
MercadoLibre Inc is a Uruguay-based e-commerce business facilitator of Argentinian origins. The e-commerce products enable retail and wholesale via Internet platforms designed to provide users with a portfolio of services to facilitate commercial transactions. The Company's geographic coverage includes 18 countries of Latin America. The primary offer is an ecosystem of six integrated e-commerce services: the Mercado Libre Marketplace, the Mercado Libre Classifieds service, the Mercado Pago payments solution, the Mercado Credito financial solutions, the Mercado Envios logistic solutions including shipping, the Mercado Ads advertising platform and the Mercado Shops digital storefront solution.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
MercadoLibre Downgraded but Retains Growth Potential
- Downgrade Impact: JPMorgan downgraded MercadoLibre (MELI) from Overweight to Neutral, cutting its price target from $2,650 to $2,100, yet the target still indicates significant upside potential, reflecting market confidence in its long-term growth.
- Competitive Pressure: Facing stiff competition from Shopee in Brazil, MercadoLibre's margins are expected to remain around 9% in the near term, with JPMorgan forecasting a decline to 8.8%, which could pressure the company's profitability.
- Long-term Growth Strategy: Despite the challenges of margin contraction, MercadoLibre has signaled its willingness to accept lower margins in the short term to focus on long-term growth, a strategy that may enhance its market position in the future.
- Market Leadership: As the leading e-commerce and fintech ecosystem in Latin America, MercadoLibre operates a massive online marketplace, a financial technology arm (Mercado Pago), and a specialized logistics network, showcasing its strong competitive position in the industry.
See More
Analysis of Growth in Latin American Fintech Companies
- Market Performance Comparison: MercadoLibre, DLocal, and Nu Holdings achieved revenue growth of 45%, 65%, and 57% respectively in their latest quarters, while two major U.S. fintech companies only grew by about 4%, highlighting the robust growth potential in the Latin American market.
- MercadoLibre Development Dynamics: As one of the largest companies in Latin America, MercadoLibre's Mercado Pago subsidiary facilitated $83.4 billion in payment volume in the latest quarter, significantly surpassing the gross merchandise value of its e-commerce business, indicating that its financial operations are rapidly outpacing traditional e-commerce.
- DLocal Financial Highlights: DLocal's revenue surged by 65%, driven by a 70% increase in payment volume, with net income rising 63%, leading to plans to distribute 30% of its free cash flow to shareholders, offering a 1.5% dividend yield that attracts income-focused investors.
- Nu Holdings Strategic Layout: Nu Holdings reported a 57% revenue increase and a 62% rise in net income, with 131 million accounts across Brazil, Mexico, and Colombia, and its stock trading at a price-to-earnings ratio below 13 times, showcasing its potential in high-margin business operations.
See More
Three Long-Term Growth Stocks to Consider
- MercadoLibre's Growth Potential: Since 2007, MercadoLibre has achieved an annualized total return of 25%, with 100 million active buyers and 61 million monthly active users significantly impacting the Latin American market; despite a 30% short-term stock price pullback, its extensive ecosystem in e-commerce and fintech offers substantial growth opportunities.
- Casey's General Stores Expansion: With an 18% annual return since 1990, Casey's has doubled its store count to nearly 3,000 since 2010, and plans to open at least 80 new stores by 2026, with two-thirds of its gross profits coming from inside sales, indicating strong growth momentum in the convenience store sector.
- Wingstop's Market Outlook: Since its IPO in 2015, Wingstop has generated a 23% annualized total return; despite facing its first decline in same-store sales, it plans to increase its store count by 15% in 2026, with average unit volumes rising from $1.1 million to $2.1 million, showcasing significant profitability improvements.
- Long-Term Investment Opportunities: Although these three stocks have experienced short-term volatility, their long-term growth potential and market positions make them attractive investment choices, especially during current market adjustments, providing investors with opportunities to buy quality stocks.
See More
Current State of US Stock Market and Investment Opportunities
- Market Performance Analysis: Despite geopolitical turmoil, the S&P 500 index is nearing all-time highs, primarily driven by AI stocks, while many non-AI stocks like MercadoLibre and Nintendo are experiencing severe drawdowns, indicating market divergence.
- MercadoLibre's Growth Potential: MercadoLibre's e-commerce and fintech platform continues to expand across Latin America, with revenue growth of 37%, 41%, and 77% in Brazil, Mexico, and Argentina respectively, despite operating margins declining from 16% to 11%, showcasing its long-term growth potential.
- Nintendo's Product Development: Nintendo's Switch 2 has sold over 17 million units since its release, and despite concerns over a lackluster game lineup, its new game Pokémon Pokopia sold 2.2 million units shortly after launch, positioning it as a major profit driver in the coming years.
- Investment Opportunity Assessment: With a market cap of $85 billion, MercadoLibre could see its revenue grow from $29 billion to $60 billion, achieving $9 billion in annual earnings if profit margins return to 15%, indicating strong investment value, while Nintendo's diverse entertainment ventures and upcoming games enhance its attractiveness.
See More
Investment Opportunities in Nintendo and MercadoLibre
- Nintendo's Growth Potential: Nintendo's Switch 2 has sold over 17 million units in the first three quarters post-launch, and despite a 36% drop from its all-time high, the new game Pokémon Pokopia sold 2.2 million units shortly after release, indicating strong market demand and future profit potential.
- Investment in Product Development: Nintendo has significantly increased its spending on game software development to enhance product diversity and appeal, thereby strengthening its position in the competitive gaming market, which is expected to drive revenue growth in the coming years.
- MercadoLibre's Market Expansion: MercadoLibre has seen significant revenue growth in Latin America, with increases of 37%, 41%, and 77% in Brazil, Mexico, and Argentina respectively, and although its operating margin has decreased from 16% to 11%, its long-term growth potential remains robust.
- Growth in Fintech Business: MercadoPago's fintech revenue grew by 61%, making it one of the fastest-growing digital finance businesses globally, and as Latin American markets transition to online shopping and mobile banking, MercadoLibre's revenue is expected to continue compounding, with profitability likely to recover in the future.
See More
Carnival Stock Declines Amid Rising Oil Prices
- Oil Price Impact: Carnival's stock is under pressure due to soaring oil prices, which are a major expense for cruise companies; despite reporting record operating income, concerns about prolonged high oil prices could lead to further declines, highlighting the market's sensitivity to shipping costs.
- Apple Sales Growth: Apple reported a 23% year-over-year increase in iPhone sales in its latest quarter, and despite concerns about lagging in AI development, investors are starting to reassess its value, indicating strong power within its tech ecosystem, even as its stock has fallen 7% year-to-date.
- MercadoLibre Investment Opportunity: Despite achieving a 47% year-over-year revenue increase in Q4 2025, MercadoLibre's stock has dropped 14% due to compressed profits and margins, currently trading at a P/E ratio of 42, near a five-year low, indicating potential investment opportunities in the Latin American e-commerce market.
- Dutch Bros Expansion Potential: Dutch Bros has doubled its store count to over 1,000 in the past four years and plans to double it again to 2,029 by 2029; despite inflationary pressures, its Q4 2025 revenue grew 29% year-over-year, with net income rising from $6.4 million to $29.2 million, showcasing its long-term growth potential.
See More
MercadoLibre Downgraded but Retains Growth Potential
- Downgrade Impact: JPMorgan downgraded MercadoLibre (MELI) from Overweight to Neutral, cutting its price target from $2,650 to $2,100, yet the target still indicates significant upside potential, reflecting market confidence in its long-term growth.
- Competitive Pressure: Facing stiff competition from Shopee in Brazil, MercadoLibre's margins are expected to remain around 9% in the near term, with JPMorgan forecasting a decline to 8.8%, which could pressure the company's profitability.
- Long-term Growth Strategy: Despite the challenges of margin contraction, MercadoLibre has signaled its willingness to accept lower margins in the short term to focus on long-term growth, a strategy that may enhance its market position in the future.
- Market Leadership: As the leading e-commerce and fintech ecosystem in Latin America, MercadoLibre operates a massive online marketplace, a financial technology arm (Mercado Pago), and a specialized logistics network, showcasing its strong competitive position in the industry.
See More
Analysis of Growth in Latin American Fintech Companies
- Market Performance Comparison: MercadoLibre, DLocal, and Nu Holdings achieved revenue growth of 45%, 65%, and 57% respectively in their latest quarters, while two major U.S. fintech companies only grew by about 4%, highlighting the robust growth potential in the Latin American market.
- MercadoLibre Development Dynamics: As one of the largest companies in Latin America, MercadoLibre's Mercado Pago subsidiary facilitated $83.4 billion in payment volume in the latest quarter, significantly surpassing the gross merchandise value of its e-commerce business, indicating that its financial operations are rapidly outpacing traditional e-commerce.
- DLocal Financial Highlights: DLocal's revenue surged by 65%, driven by a 70% increase in payment volume, with net income rising 63%, leading to plans to distribute 30% of its free cash flow to shareholders, offering a 1.5% dividend yield that attracts income-focused investors.
- Nu Holdings Strategic Layout: Nu Holdings reported a 57% revenue increase and a 62% rise in net income, with 131 million accounts across Brazil, Mexico, and Colombia, and its stock trading at a price-to-earnings ratio below 13 times, showcasing its potential in high-margin business operations.
See More
Three Long-Term Growth Stocks to Consider
- MercadoLibre's Growth Potential: Since 2007, MercadoLibre has achieved an annualized total return of 25%, with 100 million active buyers and 61 million monthly active users significantly impacting the Latin American market; despite a 30% short-term stock price pullback, its extensive ecosystem in e-commerce and fintech offers substantial growth opportunities.
- Casey's General Stores Expansion: With an 18% annual return since 1990, Casey's has doubled its store count to nearly 3,000 since 2010, and plans to open at least 80 new stores by 2026, with two-thirds of its gross profits coming from inside sales, indicating strong growth momentum in the convenience store sector.
- Wingstop's Market Outlook: Since its IPO in 2015, Wingstop has generated a 23% annualized total return; despite facing its first decline in same-store sales, it plans to increase its store count by 15% in 2026, with average unit volumes rising from $1.1 million to $2.1 million, showcasing significant profitability improvements.
- Long-Term Investment Opportunities: Although these three stocks have experienced short-term volatility, their long-term growth potential and market positions make them attractive investment choices, especially during current market adjustments, providing investors with opportunities to buy quality stocks.
See More
Current State of US Stock Market and Investment Opportunities
- Market Performance Analysis: Despite geopolitical turmoil, the S&P 500 index is nearing all-time highs, primarily driven by AI stocks, while many non-AI stocks like MercadoLibre and Nintendo are experiencing severe drawdowns, indicating market divergence.
- MercadoLibre's Growth Potential: MercadoLibre's e-commerce and fintech platform continues to expand across Latin America, with revenue growth of 37%, 41%, and 77% in Brazil, Mexico, and Argentina respectively, despite operating margins declining from 16% to 11%, showcasing its long-term growth potential.
- Nintendo's Product Development: Nintendo's Switch 2 has sold over 17 million units since its release, and despite concerns over a lackluster game lineup, its new game Pokémon Pokopia sold 2.2 million units shortly after launch, positioning it as a major profit driver in the coming years.
- Investment Opportunity Assessment: With a market cap of $85 billion, MercadoLibre could see its revenue grow from $29 billion to $60 billion, achieving $9 billion in annual earnings if profit margins return to 15%, indicating strong investment value, while Nintendo's diverse entertainment ventures and upcoming games enhance its attractiveness.
See More
Investment Opportunities in Nintendo and MercadoLibre
- Nintendo's Growth Potential: Nintendo's Switch 2 has sold over 17 million units in the first three quarters post-launch, and despite a 36% drop from its all-time high, the new game Pokémon Pokopia sold 2.2 million units shortly after release, indicating strong market demand and future profit potential.
- Investment in Product Development: Nintendo has significantly increased its spending on game software development to enhance product diversity and appeal, thereby strengthening its position in the competitive gaming market, which is expected to drive revenue growth in the coming years.
- MercadoLibre's Market Expansion: MercadoLibre has seen significant revenue growth in Latin America, with increases of 37%, 41%, and 77% in Brazil, Mexico, and Argentina respectively, and although its operating margin has decreased from 16% to 11%, its long-term growth potential remains robust.
- Growth in Fintech Business: MercadoPago's fintech revenue grew by 61%, making it one of the fastest-growing digital finance businesses globally, and as Latin American markets transition to online shopping and mobile banking, MercadoLibre's revenue is expected to continue compounding, with profitability likely to recover in the future.
See More
Carnival Stock Declines Amid Rising Oil Prices
- Oil Price Impact: Carnival's stock is under pressure due to soaring oil prices, which are a major expense for cruise companies; despite reporting record operating income, concerns about prolonged high oil prices could lead to further declines, highlighting the market's sensitivity to shipping costs.
- Apple Sales Growth: Apple reported a 23% year-over-year increase in iPhone sales in its latest quarter, and despite concerns about lagging in AI development, investors are starting to reassess its value, indicating strong power within its tech ecosystem, even as its stock has fallen 7% year-to-date.
- MercadoLibre Investment Opportunity: Despite achieving a 47% year-over-year revenue increase in Q4 2025, MercadoLibre's stock has dropped 14% due to compressed profits and margins, currently trading at a P/E ratio of 42, near a five-year low, indicating potential investment opportunities in the Latin American e-commerce market.
- Dutch Bros Expansion Potential: Dutch Bros has doubled its store count to over 1,000 in the past four years and plans to double it again to 2,029 by 2029; despite inflationary pressures, its Q4 2025 revenue grew 29% year-over-year, with net income rising from $6.4 million to $29.2 million, showcasing its long-term growth potential.
See More
