Best Stocks: The Amazon of South Korea that's regaining investor attention after four years in exile

CNBC

8 hours ago

(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Sean posted a mystery chart in our internal research chat without any labels and asked my group "Would anyone buy this?" It looked good and we all said yes. We were surprised to find out it was the iShares Core MSCI Emerging Markets ETF , more commonly known as IEMG (Disclosure: we own this for client accounts at Ritholtz Wealth Management): Up until recently, the emerging markets equity asset class has been fast asleep, but now, as you can see, it's waking up. Within IEMG, South Korean stocks are the fourth largest country allocation, after China, Taiwan and India. This is important to know because South Korean stocks are literally on fire this year. The benchmark index, the KOSPI , is up 28% year-to-date, leaving all other major Asian indices in the dust. And here is the EWY , another iShares product that directly represents South Korea, it's an index fund that seeks to replicate the MSCI Korea 25/50 Index. It's smashing the performance of the the world ex-USA: Now you might be saying "But Josh, I thought the Best Stocks in the Market list was US stocks only?" And you're right, it is. There just so happens to be a US-based name on our list that dominates Korean e-commerce, streaming video, food delivery, fashion and payments. That company is called Coupang (CPNG) and it's based in Seattle, despite the fact that its business is in South Korea. The company was founded in 2010 by a South Korean-born American businessman named Bom Kim. Originally, Kim dropped out of Harvard Business School to build a Groupon clone for his native country. He quickly pivoted from coupons to e-commerce, realizing how big the opportunity was. The company went public to a great deal of fanfare in March of 2021 during the IPO bubble. It opened up near $50 per share and subsequently crashed to below $10, never to be spoken of again. Until now. I hope you enjoy this look at an unsung company that has just begun to regain the market's attention after four years in the wilderness. Sean absolutely cooked in his write-up below: Best Stock Spotlight: Coupang Inc (CPNG) On the list since: 5/7/2025 One-year price chart with moving averages, RSI: Sean — CPNG is an Amazon (AMZN) look-alike, similar to the likes of MercadoLibre (MELI) , the Amazon of Latin America, and Alibaba (BABA) the largest e-commerce player in China. Looking at market cap alone, AMZN is above $2 trillion while BABA is above $200 billion, MELI is at $128 billion, and CPNG is at $52 billion. There is a lot of room to grow for CPNG and their earnings reflect that. MELI is probably the closest comp to CPNG so we'll take a look at them side by side. For context, MELI has been one of the biggest home runs in the history of international stock markets — a 9,000% return for shareholders since inception: MercadoLibre and Coupang are both regional, emerging market e-commerce platforms, each leading in their respective markets — Latin America and South Korea. Both companies have asset-heavy fulfillment models, building out their own warehousing and delivery infrastructure to ensure speed and reliability. Beyond retail, MELI and CPNG are evolving into digital platforms, expanding into payments (MercadoPago and Coupang Pay), advertising, and third-party seller ecosystems. They are both clearly utilizing the AMZN playbook. MELI is on another level than CPNG when it comes to profitability, but CPNG is quickly catching up. MELI currently earns a 46.7% gross margin and a 12.9% operating margin vs a 29.3% gross margin and 1.9% operating margin for CPNG. However, CPNG is blowing MELI out of the water in terms of earnings growth. Looking back the past two years, CPNG expanded gross margins by 480 basis points and EBITDA margins by 190 basis points (1 basis point equals 0.01%). MELI's gross margins declined 390 basis points over that same period while EBITDA margins grew only 50 basis points. As of each company's last earnings report, MELI expanded its operating margin 70 basis points while CPNG nearly doubled that growth, expanding margins by 130 basis points year over year. (data via Quartr): Coupang is scaling a logistics empire to rival MELI — but in a much denser, faster market. Over 70% of South Korea's population lives within just 60 miles of a logistics center, allowing Coupang to offer same-day and next-day delivery to over 99% of the country's population. As volume grows, so does margin leverage — which explains why their operating margins have expanded so violently. (data via TechCrunch). This growth is hitting the bottom line. When looking at EPS growth relative to AMZN, MELI, and BABA, CPNG is the fastest grower, and it's not close. Of the 4 comparable companies here, CPNG has the highest expected EPS growth this year and next, at 290% and 127% respectively for 2025 and 2026. MELI is the next closest competitor in terms of earnings growth, expected to grow 33% for 2025 and 39% for 2026. (data via Quartr) Like MELI and BABA before it, CPNG is executing a vertically integrated model that's powering both top-line expansion and margin improvement, and investors are pricing in that growth. Risk management Josh here — CPNG, despite its rally this year, is still in a 40% drawdown from the '21 peak despite the fact that it is now a much bigger, more successful business than it was at the time of its IPO. This May, Barclays reiterated its overweight rating and raised its price target to $36 after CPNG delivered another strong quarter. The analyst mentioned CPNG's upbeat margin trajectories, and ongoing 20% constant-currency revenue growth forecasts for 2025. Barclays says gross profit in their largest business segment, Product Commerce, is set to outpace revenue growth, driven by investments in automation, machine learning, and logistics scale-up. The Bill and Melinda Gates Foundation, Chase Coleman's Tiger Capital, Henry Ellenbogen's Durable Capital and the famed Seth Klarman protege, David Abrams, are all major shareholders here, as is Baillie Gifford, one of the earliest institutional investors to build a major position in Tesla. Given the outlook, I like this better as an investment than a trade. As you can clearly see in the chart above, the $25 level has seen a lot of congestion over the last year but the buyers have won the wrestling match. I'd use $25 as a mental stop, depending on how and why it gets down there, I might use that as a place to lighten up or exit. The recent moving average crossover (50-day breaking above the 200-day) gives me encouragement that we could be at the beginning of a brand new uptrend. The stock is now consolidating recent gains. My bet would be that this is what sets up the next leg higher. DISCLOSURES: Ritholtz Wealth owns IEMG for client accounts All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. 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