Have you ever wondered where the next big investment opportunity might be hiding while everyone is still obsessed with the usual U.S. mega-caps? Lately, I’ve been paying closer attention to markets outside the States, and one name keeps popping up in conversations among growth-oriented investors. It’s not some obscure startup – it’s a company that’s already the undisputed leader in its region, blending online shopping with digital payments in a way that feels very familiar, yet refreshingly undervalued.
Over the past year or so, money has started flowing out of expensive American stocks into areas that offer better value. South America, in particular, has caught my eye. And right at the center of this shift is a business that’s often called the Amazon and PayPal of Latin America. I’m talking about MercadoLibre, ticker MELI. The charts are starting to tell an interesting story, and the broader economic backdrop seems to be aligning perfectly.
A Compelling Macro Setup for South American Growth
Let’s step back for a moment and look at the bigger picture. U.S. stocks have delivered incredible returns over the last five years, but much of that has been driven by sky-high expectations for AI spending – expectations that might take years to fully materialize into profits. Meanwhile, valuations here at home have stretched to levels that make many investors nervous.
In contrast, emerging markets have quietly been outperforming recently. Take the popular emerging markets ETF – it gained around 34% last year while the S&P 500 managed 18%. Of course, over five years the picture flips, with U.S. stocks far ahead. But that gap feels like catch-up potential to me, especially when you drill down into specific regions.
Not all emerging markets are the same, though. Asia dominates most broad indexes, with heavy weightings in China, Taiwan, India, and South Korea. South America is a smaller slice, but the performance numbers from countries like Argentina, Peru, and Mexico over the past five years are eye-catching. Several have more than doubled, helped along by a weakening U.S. dollar.
The Dollar’s Long-Term Downtrend
Speaking of the dollar, the U.S. Dollar Index has been sliding since its peak in 2022. If you draw a simple trendline from the lows back in 2011, we’re right at that support level now. A decisive break lower could accelerate the decline – and that’s generally bullish for international stocks and commodities.
Why does this matter for South America? Many countries there are major exporters of energy, metals, and agricultural products. A softer dollar tends to boost commodity prices, putting more money into those economies. Add in relatively modest exposure to U.S. tariffs compared to other regions, and the outlook starts looking pretty favorable.
Geopolitical tensions have also eased somewhat in recent years, creating a more stable environment for investment. All these factors together make a strong case for capital rotation into the region. In my view, this isn’t just short-term noise – it feels like the early stages of a multi-year trend.
Standing Out in a Crowded Field
Within this improving macro environment, certain companies are better positioned than others to capture the upside. For me, MercadoLibre stands head and shoulders above the rest when it comes to expressing a bullish view on South American growth.
This isn’t a commodity producer or a traditional bank – it’s a technology platform that’s becoming essential infrastructure for commerce across the continent. Operating primarily in Brazil, Mexico, and Argentina, the company runs both a dominant ecommerce marketplace and a fast-growing payments system called Mercado Pago.
Think about how Amazon started as an online bookstore and gradually built out logistics, cloud services, and more. MercadoLibre is following a similar playbook, but with the added twist of digital finance in markets where traditional banking reaches far fewer people.
- Marketplace dominance in key countries
- Rapid adoption of digital wallets and payments
- Heavy investment in logistics networks
- Expanding credit and financial services
- Growing advertising revenue on the platform
These businesses feed into each other beautifully. More shoppers mean more merchants, which means more payment volume, which means more data for lending decisions. It’s a classic flywheel effect, and it’s starting to show up clearly in the financial results.
Improving Fundamentals Tell the Story
Perhaps the most encouraging development has been the steady expansion of profitability. Revenue growth has been impressive for years, but margins are now following suit as the investments in infrastructure begin paying off.
Looking back to 2017, you can see how operating leverage is kicking in. The company is spending heavily upfront on warehouses, delivery fleets, and technology – much like Amazon did during its high-growth phase. But as utilization rises, those fixed costs get spread over a larger base, driving margins higher.
Growth companies rarely come cheap when they’re hitting their stride, but the combination of scale, network effects, and expanding margins can justify premium valuations.
Analysts currently expect earnings to grow more than 40% annually in the coming years. At roughly 40 times forward earnings with that kind of growth rate, the stock isn’t screaming cheap. But compared to some U.S. growth darlings trading at much higher multiples with slower expected growth, it starts looking reasonably attractive.
Digital penetration in Latin America still has plenty of room to run. Ecommerce as a percentage of retail sales lags far behind developed markets, and cash still dominates many transactions. As smartphones spread and trust in digital payments grows, MercadoLibre sits right in the sweet spot to benefit.
What the Charts Are Saying
Now, let’s talk about the technical picture, because that’s where things get really interesting right now. On the long-term monthly chart, MELI has been in a beautiful uptrend since bottoming in 2009.
The price action stays contained within a rising parallel channel – classic trend behavior. Recently, the stock pulled back to test the lower boundary of that channel, right around a prior resistance zone near $2,000 that dates back years. That level held firmly, which I see as a major positive sign.
Old resistance becoming new support is one of the most reliable patterns in technical analysis. Combine that with the broader emerging market strength and a weakening dollar, and the setup feels compelling.
Zooming into the weekly timeframe, the second half of 2025 looked like a healthy consolidation within a smaller channel. We’re now pressing against overhead resistance around $2,300. A clean break above that level could open the door to much higher prices – potentially the mid-to-high $3,000s over time.
- Long-term uptrend intact since 2009
- Major support zone holding at channel bottom and prior resistance
- Consolidation phase completing
- Key resistance test underway at $2,300
- Potential measured move targeting $3,000+
Of course, nothing is guaranteed in markets. Pullbacks happen, sentiment shifts. But when fundamentals improve alongside a constructive chart pattern and favorable macro tailwinds, the probabilities start tilting in your favor.
Positioning for Potential Upside
In my own growth-focused portfolio, I’ve held a position in MercadoLibre since mid-2024 and added to it late last year. Currently it’s about a 2% weighting. If we get that decisive move above $2,300 resistance, I’d feel comfortable increasing to around 3%, with the expectation that $2,000 should now act as solid support underneath.
Position sizing matters a lot with higher-volatility growth names like this. Latin American markets can swing sharply on currency moves or political headlines. But over a multi-year horizon, the structural growth drivers appear overwhelmingly positive.
I’ve found that the best opportunities often come when a strong company operates in an improving environment that most investors haven’t fully priced in yet. Right now, MercadoLibre checks all those boxes for me.
The combination of dominant market position, expanding profitability, technical breakout potential, and supportive macro trends makes a powerful case. While U.S. investors chase the same crowded trades, pockets of real value are emerging elsewhere.
South America’s leading technology platform seems poised to benefit from digital transformation that’s still in its early innings. If the dollar continues weakening and commodities stay firm, the regional tailwinds could provide even more fuel.
Will MELI deliver the kind of returns that make it a core holding for years to come? Only time will tell. But based on everything I’m seeing today – from the financial trajectory to the chart setup – the risk/reward looks attractive enough to stay engaged.
For investors looking to diversify beyond domestic mega-caps without sacrificing growth exposure, this Latin American powerhouse deserves serious consideration. Sometimes the most exciting opportunities aren’t in the headlines every day – they’re quietly building momentum far from Wall Street’s constant spotlight.
As always, do your own research and consider your personal risk tolerance. Markets reward patience, but they also reward those willing to look where others aren’t. Right now, that place might just be south of the border.
