$120 oil doesn’t just hit your work-school-home shuffle…
Energy is a price factor in everything you buy. And that realization will drive international online commerce companies for years to come.
Listen… I’d be a jerk to pretend internet stocks are shock-proof. After all, eBay fell from a high of 27 bucks per share all the way down to 7 back in the year 2000.
But here’s what happened to buyers who recognized the unstoppable momentum of the internet-based economy and went long on eBay in 2001…
They racked up 728% gains in just a few years.
By the time the stock split at the beginning of 2005, NASDAQ:EBAY had blown through its Y2K high to $58 per share.
In tracking the world’s budding e-commerce plays, a few major factors are known to be driving the sector forward:
- convenience
- fuel prices
- re-urbanization
You’ll notice that those three major motivators of internet retailing hinge on energy. That’s no accident.
From petroleum pellets that make plastic goods, to truckers who honked around the Capitol last week for fuel relief, then finally to consumers sick of driving across town to find shrinking savings at Wal-Mart…
Everybody in the traditional retail sector is hurting, helping online sales.
SUVs and suburban life have fallen out of favor in the U.S. Along with that, countries where city cores have always been strong are witnessing a surge in e-commerce that comes from higher internet use.
Investing in International Internet Stocks
Argentina’s economy grew by 8.7% in 2007, continuing to recover from an almost total meltdown at the turn of the millennium.
Argentina’s upward climb is continuing in 2008, with 4.5% GDP growth forecasts beating Uncle Sam by 650%.
Latin America’s high-speed internet market grew at a jaw-dropping 54% compound yearly growth rate from 2003 to 2007. Which, by the way, turbo-charges small enterprises in countries like Argentina… taking start-ups from street stalls to websites, where they can reach millions in milliseconds.
My Favorite Internet Stock Right Now
Online marketplace MercadoLibre.com (NASDAQ:MELI) is your stock play on Latin America’s internet commerce boom.
Since its IPO in mid-2007, MELI rocketed from $28 to $78 a share before falling hard in early ’08. As with eBay, though, those with strong stomachs are still up big. MELI now sits at just over $52.
Branching out of Buenos Aires, MercadoLibre has brought hundreds of millions of web surfers into its reach. As a matter of fact, this isn’t even an ADR with a local listing in Argentina, it’s just a Nasdaq stock.
Buyers and sellers in over a dozen Latin American countries and the U.S. can make use of MercadoLibre—which incidentally is Spanish for "free market."
Delivering services essentially the same as eBay, including online payment features similar to eBay’s PayPal arm, MercadoLibre has justified its 2008 recovery with stellar earnings.
Q4 revenue in 2007 jumped at a year-on-year rate of nearly 74%, net income skyrocketed by 188.5%!
That’s exactly the kind of growth potential we’re talking about.
E-Commerce Growth Will Continue
This is what it comes down to: the e-commerce convenience of delivery and the advantage of competing bids serve you better than traditional retail.
Even in Canada, far from MercadoLibre’s hot Latin American turf, the sector is booming.
A new national report says online sales, payments, and other internet-based transactions in Canada increased by 27% in 2007.
The top reasons execs gave for ramping up online business? Lower costs and new customers.
That means steady margins and increasing revenues, which is music to any stockholder’s ears.
Finally, let’s face the facts… You’re reading this online, which means you’re probably at least knee-deep in the internet economy already.
So why not play it?
Yours digitally,
Sam Hopkins
By the way, I recommended an Asian e-commerce play to Global Growth Stocks readers straight from my research junket in November, 2007. That stock logged a double-digit gain in one day last week after its earnings beat the snot out of Wall Street’s estimates. Fact is, we’re super-bullish on global e-commerce, and there are more plays in the works. Don’t miss the next one—join GGS today.
