Why These Shares are Tanking

Before you go, we thought you'd like these...
Before you go close icon

The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world.

Shares of MercadoLibre are getting slammed right now despite meeting analysts expectations for revenue and earnings per share -- so, what gives? Many investors are worried about all of the company's foreign exchange headwinds, but honestly that should have been baked into their expectations when investing in this stock in the first place. Sure, shares got a little frothy and still trade at a steep P/E, but they've got monster growth to boot. MercadoLibre now has 37% more users than last year and has expectations for near-30% growth rates over the next five years. For investors waiting on the side line for a discount, the dip over the last few weeks could be your moment.  

Then again, Mercadolibre has inherently more risk than a proven domestic company. If you like the idea of supercharged emerging market growth but are worried about instability, you should read about "3 Companies Set to Dominate the World." They are all domestically based companies with sterling brands and business models that are taking proven domestic techniques and applying them to the emerging world. Their potential for profit is enormous, and they're a bit more stable than your traditional emerging market play. Click here to read about them now.

At the time this article was published Austin Smith owns shares of McDonald's. The Motley Fool owns shares of Arcos Dorados and MercadoLibre.Motley Fool newsletter services recommendArcos Dorados, McDonald's, MercadoLibre, and PriceSmart. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners