By any measure, this has been another challenging year domestically and abroad. Geopolitical tension has spilled over into outbursts of prolonged conflict. Interest rates remain high, and softer consumer spending and growing unemployment on the back of higher prices are starting to chip away at economic activity.
Surprisingly, market reaction to current events remains positive. The S&P 500 has produced year-to-date (YTD) returns of nearly 17%, while the Nasdaq is up more than 21%.
Need to Know Key Points
- Despite global uncertainty, market sentiment remains strong.
- Companies in e-commerce, financial services and banking can provide stability.
- Growth stocks can help to diversify holdings, while monetizing on long-term gains.
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Market sentiment continues to be strong, and investors interested in building long-term wealth through growth stocks are in the position to scoop up big-names at cheap prices.
Mercado Libre
- Industry Sector: eCommerce & fintech
- Market Capitalization: $84.19 Bn
- Year-to-Date Performance: +8.60%
Mercado Libre (NASDAQ: MELI | MELI Price Prediction) has been at the forefront of democratizing the e-commerce and financial technology services market across much of Latin America.
In Q1 2024, Mercado reported another positive quarter of growth, with net revenues up 36% year-over-year (YoY) and financial income surging 94% on a foreign exchange neutral basis. To add to this, the company reported over $344 million in net income with a steady 7.9% margin.
Mercado Libre has a strong presence across the region, with Argentina, Brazil, and Mexico being the company’s most active consumer markets. During the last five reporting quarters, the company boasted double-digit growth across key company segments.
The financial services segment of the company – Mercado Pago – reported seeing over 49 million monthly active users, which was an increase of 38% YoY and up 32% YoY from Q4 2023. The company is seeing stronger, and ongoing user engagement trends across the region, and their strengthening value proposition has allowed them to cross-sell, and increase profitability across its business segments.
Visa
- Industry Sector: Finance
- Market Capitalization: $512.22 Bn
- Year-to-Date Performance: -0.82%
Visa (NYSE: V) operates as one of the largest digital and debit card payment platforms. The company has roughly 4.2 billion card users worldwide, representing more than half of the global population. Though the company operates several financial services, debit and credit cards make up 58.3% of their business.
In their Q3 2024 reporting, Visa announced that overall revenue increased 10% on a nominal and constant-dollar basis, with revenues of roughly $8.9 billion. More so, the company reported that total net income for the quarter ended at $4.8 billion, which translates into $2.40 per share (GAAP) and $2.42 per share (non-GAAP).
Visa reported $5.8 billion in share repurchases and dividend distributions to shareholders. Their ongoing share buyback program has meant that the company is gradually decreasing the number of available shares, which could in return help increase share prices as supply decreases and demand continues to grow.
The expected milder transaction volumes and consumer activity have left stock performance moving sideways in recent months with stocks down 11.79% from its former peak. Investors might see this as a near-term pain point, however, the company reiterated during their Q3 results that they are continuing new partnership expansions while investing heavily in future digital products and new commerce services.
Bank of America
- Industry Sector: Finance
- Market Capitalization: $332.05 Bn
- Year-to-Date Performance: +25.74%
Bank of America (NYSE: BAC) is a top stock pick for growth investors. According to their recent second-quarter results, the company reported roughly 37.2 million consumer checking accounts with 92% being primary accounts. On top of this, the company added around 278,000 new consumer accounts in the recent quarter, while small business checking accounts rose 1% to 3.9 million.
For the second quarter, the bank reported $10.2 billion in revenues in the consumer banking segment, which was a decline of 3% from the previous quarter, while combined credit and credit spending of $234 billion improved by the same level at 3%. Performance in other business segments has been strong. In global wealth and investment management, revenue rose by 6% to $5.6 billion, while client balances rose by 10%, hitting $4 trillion.
For growth investors Bank of America provides stability and much-needed stability during uncertainty. Wall Street analysts believe that the 2.25% annualized yield is a generous return for investors, while BAC shares trade at 15 times trailing earnings.
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