Investing in High-Growth Stocks: Coupang and MercadoLibre Shine
Investors often increase their chances of identifying standout stocks by targeting companies showing strong revenue growth momentum. Two firms that have recently reached new highs following their first-quarter updates are Coupang and MercadoLibre. Both companies trade at reasonable valuations, suggesting potential for market-beating returns in 2025 and beyond.
Coupang: A Unique E-Commerce Experience in South Korea
Coupang (NYSE: CPNG) offers a distinctive online shopping experience in South Korea, with plans for international expansion. The stock soared to a new 52-week high after revealing a 21% year-over-year revenue growth for Q1, once adjusted for currency changes. Despite this surge, its valuation appears modest, indicating that investors may not fully appreciate its potential.
Following its latest results, the stock increased by 10%. The company reported an adjusted EBITDA of $382 million, yielding a margin of 4.8%. Management aims for a long-term adjusted EBITDA margin of 10%. The number of active customers grew by 9% year-over-year, reaching 23.4 million. Even though revenue per customer dipped slightly, the management stated that macroeconomic challenges and tariffs have not significantly impacted sales to the U.S.
Coupang’s appeal lies in its efficient delivery model—over 85% of orders arrive without traditional packaging. The company prioritizes customer satisfaction, continually investing in innovative solutions. It has been making strides in Taiwan, replicating its success from South Korea, which could unlock new growth opportunities in other markets beyond its home base.
Currently, Coupang trades at just 1.58 times trailing revenue, a valuation point significantly below Amazon’s early trading multiples, suggesting it may be undervalued. This valuation could indicate attractive growth prospects for investors looking for long-term gains.
Image source: Getty Images.
MercadoLibre: Dominating E-Commerce and Fintech in Latin America
MercadoLibre (NASDAQ: MELI) continues to lead in one of the fastest-growing e-commerce markets. Recently, the stock reached a new 52-week high, posting a remarkable 64% revenue growth year-over-year in Q1 on a currency-neutral basis, along with a solid profit margin of 8.3%, resulting in $494 million from $5.9 billion in revenue.
The company’s operations in Argentina are particularly strong, with revenue adjusting for currency effects rising by 184% compared to last year. As MercadoLibre integrates its commerce and fintech services, it enhances its competitive edge. Customers engaging with its Mercado Pago credit service often also use other offerings, establishing a recurring and profitable growth cycle.
Looking ahead, MercadoLibre is poised for sustained high growth, particularly as its online marketplace and fintech services currently capture less than 5% of retail spending in Latin America. Given its track record—returning 1,500% over the last decade and trading at an attractive 6 times sales—it presents significant upside potential.
Considerations Before Investing in Coupang
Before purchasing Coupang stock, investors might weigh the following:
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Disclosure: John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. John Ballard is invested in Coupang and MercadoLibre. The Motley Fool has a stake in and recommends Amazon and MercadoLibre, and also recommends Coupang.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
