Is MERCADOLIBRE INC (NASDAQ:MELI) following the Minervini trend for explosive growth?

Our stock screener has spotted MERCADOLIBRE INC (NASDAQ:MELI) as a stocks which checks several boxes as specified by Mark Minervini. We will dive into an analysis below.

Does MELI pass the Minervini Trend Template check?

MELI checks all the boxes when evaluating the Minervini Trend Template. This is a set of basic technical criteria to identify stocks in strong uptrends:

• ✔ Relative Strength is above 70.
• ✔ Current price is within 25% of it's 52-week high.
• ✔ Current price is at least 30% above it's 52-week low.
• ✔ The current price is above the 50-, 150- and 200-day SMA price line.
• ✔ The SMA(200) is trending upwards.
• ✔ The SMA(150) is above the SMA(200)
• ✔ The SMA(50) is above the SMA(150) and the SMA(200)

Why MELI may be interesting for high growth investors.

To evaluate a stock's growth potential, ChartMill utilizes a High Growth Momentum Rating (HGM) on a scale of 0 to 10. This assessment considers various growth and profitability aspects, like EPS and revenue growth, accelleration, surprises and revisions. MELI has achieved a 7 out of 10:

Explosive Earnings Growth

• The EPS of MELI has exhibited growth from one quarter to another (Q2Q), with a 288.0% increase. This underscores the company's ability to generate higher earnings and improve its financial standing.
• MELI shows accelerating EPS growth: when comparing the current Q2Q growth of 288.0% to the previous quarter Q2Q growth of 9.36%, we see the growth rate improving.
• MELI has experienced 92.94% growth in EPS over a 12 month period, demonstrating its ability to generate sustained and positive earnings momentum.
• MELI has experienced 173.0% growth in EPS over a 3-year period, demonstrating its ability to generate sustained and positive earnings momentum.
• MELI has demonstrated strong quarter-to-quarter (Q2Q) revenue growth of 42.2%, reflecting its ability to generate consistent increases in sales. This growth highlights the company's effective market positioning and its potential for continued success.
• The sales growth of MELI is accelerating: the current Q2Q growth of 42.2% is above the previous quarter Q2Q growth of 35.27%. Sales momentum and acceleration are key for high growth systems.
• MELI has achieved significant 1-year revenue growth of 38.89%, signaling its ability to capture market opportunities and drive top-line expansion. This growth indicates the company's effective execution and its potential for continued success.
• The average next Quarter EPS Estimate by analysts was adjusted by 10.48%, reflecting the evolving market expectations for the company's EPS growth.
• MELI has surpassed EPS estimates 3 times in the last 4 quarters, reflecting its strong financial performance and effective management. This trend suggests the company's ability to generate positive earnings surprises and drive shareholder value.

Profitability & Financial Strength

• The profit margin of MELI has seen steady growth over the past year, signaling improved profitability.
• With a favorable trend in its free cash flow (FCF) over the past year, MELI demonstrates its ability to generate robust cash flows and maintain financial stability. This growth reflects the company's focus on efficient capital allocation and cash management.
• MELI exhibits a strong Return on Equity (ROE) of 43.92%, indicating the company's ability to generate solid returns on shareholder investments. This metric reflects the company's efficient utilization of equity capital and its profitability.
• With a Debt/Equity ratio of 0.66, MELI appears to have a manageable debt load relative to its assets.

Market Strength & Institutional Confidence

• With 83.73% of the total shares held by institutional investors, MELI showcases a healthy distribution of ownership. This suggests a mix of institutional and retail investors, fostering a dynamic market for the stock.
• MELI has achieved an impressive Relative Strength (RS) rating of 93.25, showcasing its ability to outperform the broader market.

Looking at the Setup

The Setup Rating of a stock determines to which extend the stock is consolidating. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. For MELI this score is currently 8:

MELI has an excellent technical rating and also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. A pullback is taking place, which may present a nice opportunity for an entry. There is very little resistance above the current price. There is a support zone below the current price at 2022.93, a Stop Loss order could be placed below this zone.

For an up to date full technical analysis you can check the technical report of MELI

Final Thoughts

It looks like MERCADOLIBRE INC meets the Minervini criteria. More high growth momentum breakout stocks can be found in our High Growth Momentum + Trend Template screen.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.