Invest in Growth Stocks: MercadoLibre and Micron Technology Opportunities

Every investor aims to become (at least) a millionaire. To help achieve this goal, investing in growth stocks is advisable, particularly those with a history of success and competitive advantages. An attractive stock valuation is also beneficial, as it facilitates growth through multiple expansions.

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While your journey towards millionaire status will depend on your time horizon and risk tolerance, two stocks can potentially aid in that endeavor: MercadoLibre (NASDAQ: MELI) and Micron Technology (NASDAQ: MU).

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1. MercadoLibre: The E-Commerce Leader in Latin America

Similar to Amazon in the U.S., MercadoLibre has established an impressive network of interconnected businesses, providing it with a competitive edge in Latin America. The company’s main operations include both direct e-commerce selling and a marketplace for third-party sellers. Additionally, it owns a significant fintech service, Mercado Pago, which offers payment solutions for its e-commerce platform, point-of-sale systems for physical retailers, credit cards, and a lending platform. Furthermore, MercadoLibre manages deliveries of e-commerce orders via Mercado Envios and has an asset management unit named Mercado Fondo.

MercadoLibre is tapping into the vast potential for e-commerce and digital payments in Latin America, experiencing remarkable growth. In the fourth quarter, revenue increased by 37%, or 96% on a currency-neutral basis. This growth was fueled by a 33% rise in total payment volume to $59 million and an 8% increase in gross merchandise volume (GMV), which reflects the total value of goods sold on its platform.

The company’s strengthening ecosystem has led to competitive advantages that contribute to margin strength. In the fourth quarter, its operating income reached a record $820 million, more than doubling from the previous year.

MercadoLibre has substantial opportunities for further growth, particularly in its key markets of Brazil, Mexico, and Argentina, as well as in the broader Latin American region. With its effective business model, it is likely to continue delivering solid results for investors. Given its growth trajectory, the stock also trades at a favorable valuation.

2. Micron Technology: Positioned for a Memory Chip Recovery

Micron is an integrated device manufacturer (IDM) that specializes in memory chips. This means the company designs and manufactures its chips, which carries more risk compared to companies focused solely on design. Historically, Micron’s performance has been cyclical, with rapid price swings in the memory chip market. However, as the demand for AI technologies surges, it is entering a promising growth phase, potentially benefiting investors.

As a close partner of Nvidia, Micron relies significantly on its large customer, which accounts for 13% of its revenue. Nvidia’s requirement for Micron’s high-bandwidth memory chips to support its Blackwell platform positions Micron favorably within the expanding AI sector.

In its latest quarter, Micron nearly doubled its revenue to $8.7 billion, with a notable surge in profitability reflected in a 25% operating margin. Additionally, its data center revenue soared by 400% year over year and rose 40% sequentially in the first fiscal quarter. This segment now comprises 55% of its total revenue, indicating strong momentum for accelerated growth.

The demand for memory chips is projected to rise significantly as they are essential for AI applications, ensuring sustained growth for Micron over the coming years. Currently, the stock appears to be a bargain relative to its semiconductor counterparts, trading at a forward price-to-earnings ratio of under 14, with expectations for significant earnings growth next year.

Despite fluctuating price and supply dynamics, Micron stock holds a strong potential for substantial appreciation in the upcoming year due to its favorable valuation and positive trends in the AI market.

Considering an Investment of $1,000 in MercadoLibre?

Before investing in stock for MercadoLibre, keep this in mind:

The Motley Fool Stock Advisor analyst team recently identified the 10 best stocks for current investment, and MercadoLibre was not included. The selected stocks have the potential for considerable returns in the future.

Consider the historic example of Nvidia making this list on April 15, 2005. If you had invested $1,000 then, it would be worth approximately $765,576!*

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon, MercadoLibre, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.