While U.S. equities have struggled to gain meaningful traction this year, several emerging markets have delivered strong outperformance. A large part of that strength has come from renewed interest in commodities and non-dollar assets. Buying commodities, from gold to industrial metals, often acts as a short on the dollar, and that dynamic has increasingly benefited emerging markets.
The performance gap tells the story. As of the Jan. 29 close, the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM) was up 10.5% year-to-date (YTD), compared to just a 1.8% gain for the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). In South Africa, currency strength has further amplified returns. The South African rand has gained nearly 25% against the U.S. dollar over the past year, helping push the iShares MSCI South Africa ETF (NYSEARCA: EZA) up almost 15% YTD and more than 84% over the past 12 months.
While a near-term pullback in commodities could support the dollar and lead to some digestion across emerging markets, the broader trend appears intact. For investors looking to diversify outside the U.S. and gain exposure to faster-growing economies, South America stands out. Here are three emerging market stocks with compelling long-term narratives.
MercadoLibre: Latin America’s E-Commerce Powerhouse
MercadoLibre (NASDAQ: MELI) is the dominant e-commerce and fintech platform in Latin America, with a market capitalization of nearly $112 billion and membership in the Nasdaq-100. The company operates in e-commerce, logistics, digital payments, and consumer credit, creating a deeply integrated ecosystem across the region.
MELI carries a Moderate Buy consensus rating, with an average price target near $2,877, implying roughly 30% upside from current levels. Investors will be watching the company’s Q4 earnings report on Feb. 19 closely, especially after it missed earnings per share (EPS) estimates in Q3 due to higher investment spending and macroeconomic pressures in Argentina.
Despite near-term margin compression, MELI continues to scale aggressively. In Q3, the company added 7.8 million new unique buyers, bringing its total user base to 77 million.
Management has emphasized that recent investments in logistics and fintech are designed to strengthen long-term competitive advantages, and won't permanently sacrifice profitability. A return to margin expansion in Q4 could be a key catalyst for MELI stock going forward.
DLocal: A High-Growth Fintech With Reasonable Valuation
DLocal (NASDAQ: DLO) is a Uruguay-based fintech company that enables global enterprises to process payments in emerging markets. Its client roster includes major names such as Amazon.com (NASDAQ: AMZN), Uber Technologies (NYSE: UBER), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), Nike (NYSE: NKE) and many others. DLO simplifies complex local payment systems, offering both pay-in and pay-out capabilities across dozens of emerging economies.
While its growth has remained impressive, what sets DLO apart is its valuation. The stock trades at a forward P/E of 16, well below many of its fintech peers. In Q3 2025, the company reported EPS of 17 cents, beating expectations, while revenue surged 52% year-over-year to $282.5 million.
Total payment volume reached a record $10.4 billion, marking the fourth consecutive quarter of growth above 50%.
Analysts maintain a Moderate Buy rating on the stock, with price targets forecasting 17% upside.
For investors seeking emerging-market exposure without paying extreme valuations, DLO offers an appealing balance of growth and value.
Nu Holdings: South America’s Digital Banking Leader
Nu Holdings (NYSE: NU) is the largest digital bank in Latin America and one of the largest globally. With a market capitalization of almost $89 billion, Nu has built a mobile-first banking platform offering digital accounts, credit cards, personal loans, insurance, and investment products.
The company continues to expand rapidly beyond its Brazilian roots. As of Q3 2025, Nu reported 13 million users in Mexico and 4 million in Colombia, with plans to enter additional Latin American markets over the coming years.
The region’s population of more than 650 million provides a long runway for growth.
Looking further ahead, Nu recently received conditional approval to expand services into the United States by 2027. It’s a move that could significantly broaden its addressable market.
With strong user growth, improving profitability, and geographic expansion underway, Nu Holdings remains a core emerging-market fintech name to watch.
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The article "3 Emerging Market Stocks Leveraging South America’s Momentum" first appeared on MarketBeat.
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