Glancing at the headlines, you'd think Latin America is an economic basket case.

Practically every day there is a story about the large number of migrants crossing the U.S. border, suggesting that things can't get much worse down south.

Now, I'm not here to talk politics. But I'm bringing this up because so many people simply want to come to the U.S. for the kinds of jobs that create the American dream.

Yet perhaps surprisingly, there's a thriving technology company based in Latin America. In fact, it's an e-commerce company often referred to as the Amazon (AMZN) of Latin America.

This company targets a region with 650 million people and one of the world's fastest-growing Internet populations. Last year, it reported more than $100 billion in payments.

Let me show you why this company is on pace to double its earnings in just about two years...

Meaning now is the time to include it in our portfolios.

Taking a Page from the Silicon Valley Playbook

Interestingly, the name of this e-commerce company, when translated to English, means "free market." That gives you a sense of how entrepreneurial the company is at heart.

When I hear that name, though, it sounds to me like big bucks!

It all started back in 1999 when Marcos Galperin, a graduate from Stanford's Graduate School of Business, founded the company with an eye toward building an e-commerce firm serving the Spanish- and Portuguese-speaking markets in Latin America.

The company got its start out of a garage in Buenos Aires – talk about taking a page out of the Silicon Valley playbook – and seven years later it boasted the largest online trading platform in the region.

Today, MercadoLibre (Nasdaq: MELI) operates in 18 countries. And as the economy south of our border expands, millions of consumers will take advantage of rising incomes to purchase tech products and consumer electronics.

That just happens to be two key areas fueling MercadoLibre's impressive growth. In fact, the company has adopted marketing programs aimed at getting consumers to register on its site and bid on everything from digital camcorders to tablet computers.

As the leading e-tailer in the region, it's uniquely poised to cash in on Latin America's huge growth in online spending. It now has more than 148 million active users and accounts for 20% of all online transactions in the region.

And today, it's the subject of my five-part screening process I use for identifying potentially profitable stocks.

Rule No. 1: Hire Great Operators

We're always looking for the best-run firms we can find. And it all starts with leadership.

Though based in Latin America, CEO Marcos Galperin has the makings of a true Silicon Valley legend.

One of his finance professors at Stanford in the late 1990s helped Galperin meet venture capitalists ("VCs"). The VCs didn't just like the business plan, but they were also impressed with the young executive's leadership skills. So they quickly funded his company.

It's since sold its stake, but eBay (EBAY) was an early investor in MercadoLibre. Said former eBay CEO Meg Whitman, "MercadoLibre's management is doing a superb job in building the leading online trading company in the region."

Rule No. 2: Find the Signal

To create real wealth, you have to ignore the Wall Street hype.

As noted above, the controversy about the influx of migrants from Latin America can give many the impression that business down there must be bad. And yet, MELI's sales are growing three times faster than Amazon's!

Rule No. 3: Swim With the Trend

Look for stocks in red-hot sectors, because they offer the best chance at life-changing gains.

MercadoLibre is benefiting from the sheer volume of folks in the region who are online. We're talking 68% of the population. Mobile use is also on the rise. By 2025, Brazil alone is estimated to exceed 200 million smartphone connections.

Rule No. 4: Focus on Growth

Companies with the strongest growth rates almost always offer the highest stock returns.

That's one of the main reasons why MercadoLibre's stock has done so well – and will continue to rise. Over the last three years, it's grown sales by an average of 72%. At just half that rate, sales would double about every two years.

The company's financial technology operation is doing gangbusters, too. Last year, it registered $36 billion in payments volume.

Rule No. 5: Look for Doubles

This is where we examine the company's earnings growth and see how long it might take for profits to double. By doing that, we can estimate how long it should take for its stock – and our potential investment capital – to double, too.

This year, MercadoLibre is expected to post per-share earnings growth of 68%. And that's a conservative figure.

But to be extra cautious, let's cut that figure in half and use what I call my doubling calculator. Mathematicians call it the Rule of 72.

Essentially, this is a way to estimate how long it might take for an investment to double, based on a given rate of return.

By dividing 72 by a given annual return rate, investors can get a rough estimate of how many years it will take for their investment to double.

In this case, let's divide MercadoLibre's conservative growth rate of 34 into 72.

When we do that, we see it should take a little more than two years for the firm to see its earnings double (72/34 = 2.1). And since stocks trade at a multiple of earnings, there's a lot of upside here.

The Next Amazon?

Admittedly, a share price of about $1,250 may appear as if seeing it double would be a stretch. But the fact is, as an e-commerce play, MercadoLibre is in a class of its own.

It's also possible that the company follows in Amazon's footsteps and splits its stock, which would bring down the price considerably.

Either way, this is a company that easily passes our screening system and is positioned to deliver investors substantial returns in the years ahead.

Of course, thanks to such a growing sector, MercadoLibre isn't the only fintech company with explosive growth potential. In fact, I've found another firm that Wall Street analysts say has huge double-digit upside potential.

I've saved the name of that company for my "Pro" readers, so don't miss out!

Cheers and Good Investing,

Chief Investment Officer
Trend Trader Daily

Tags: amazon silicon-valley