Two Potential Stocks That Might Easily Accumulate Wealth
The market isn't exactly a treasure trove of straightforward opportunities for amassing wealth. Even top-tier stocks grapple with uncertainty and market fluctuations that can significantly sway stock prices.
However, a consistent growth trajectory can provide solace to investors despite dramatic swings in the stock market. A well-corrected growth stock can likewise provide a chance to prosper from past missteps.
As long as one possesses patience and a keen tolerance for stock rate fluctuations, these two e-commerce juggernauts below hold promising prospects to build wealth for their shareholders.
MercadoLibre
MercadoLibre (-2.51% for MELI) embodies Latin America's counterpart to eBay and PayPal. Its e-commerce, fintech, and logistics operations synergize to spur business expansion and generous returns for investors. MercadoLibre's impressive adaptability might be its knack for prospering amid adversity. Latin American countries often grapple with political instability, inflation, and complex regulatory landscapes that stifle business progress.
The company helps its patrons to navigate these obstacles. Merchants seeking a platform to sell their wares can rely on its online marketplace. Mercado Pago's financial services can boost purchasing power for numerous customers even if they don't possess a bank account or credit card. In the markets serviced by Mercado Envios, the company can manage stockpiling, order fulfillment, and delivery for business clients.
Mercado Pago and Mercado Envios also cater to clients not transacting on MercadoLibre. The MercadoLibre site also peddles ads, and these enterprises help the company earn income not directly tied to e-commerce.
Investors might also reap an exclusive opportunity following its third-quarter 2024 earnings. Its Q3 revenue of $5.3 billion swelled by 35% compared to the preceding year. Nevertheless, the company amplified its credit portfolio. Consequently, expenses swelled, notably with a 83% increase in the allowance for doubtful debts. This translated into a $397 million net income in Q3, which saw a mere 11% increase.
This news plunged the stock before it recouped most of its losses in subsequent sessions. During this volatility, its stock soared 25% higher thus far in 2024. It also maintains a price-to-earnings (P/E) ratio of 70, hovering just above multi-year lows.
Despite the 55% surge in net income for the first three quarters this year, MercadoLibre stock appears worth its premium. Hence, the stock should persistently climb upward as the company expands its customer base across multiple verticals.
Sea Limited
Sea Limited (-0.70% for SE) enjoyed a golden age during the pandemic's peak. Its influential Shopee online commerce platform dominated e-commerce in Southeast Asia. Its renowned mobile game Free Fire bolstered its Garena gaming business, and SeaMoney catered to the growing need for fintech services in its region.
Unfortunately, Sea Limited faced several hurdles during the 2022 bear market. Shopee tried to venture into Europe and Latin America where it did not hold a competitive edge, forcing it to shutter these markets soon after launch. The Indian government also banned Free Fire, affecting Garena's presence in the world's most populous country. However, Free Fire has experienced a revival in popularity lately, and the company is expected to regain approval in India shortly.
Moreover, Shopee now prioritizes logistics investments in Southeast Asia, replicating the formula that propelled MercadoLibre and Amazon in their respective homelands.
These initiatives have propelled Sea Limited back to double-digit revenue growth. In Q3, revenue of $4.3 billion surged by 31% compared to Q3 2023. Although Garena's revenue dipped 16% in that period, Shopee's 24% revenue growth and the 38% revenue increase from digital financial services ensured its expansion.
Sea Limited managed to curb its operating expense growth to just 6%. This enabled net income to shoot up to $153 million in Q3, a notable improvement from the $144 million loss in the comparable quarter in 2023. Upon this news, Sea Limited stock reached new heights since early 2022. Consequently, the stock has surged by a remarkable 175% this year.
Despite its recent profitable stride, investors may be reluctant to shrug off its 56 forward P/E ratio as the company strengthens its market position in e-commerce, fintech, and possibly future gaming ventures.
Although market volatility can impact investment decisions, the resilient growth trajectory of MercadoLibre and Sea Limited makes them attractive options for finance-savvy investors. MercadoLibre's diverse operations in e-commerce, fintech, and logistics, as well as its ability to navigate challenging economic environments, offer a promising opportunity for money growth. Similarly, Sea Limited, with its dominance in e-commerce and gaming, and its strategic focus on logistics investments, shows potential for significant returns in the long term, even with its higher price-to-earnings ratio.
