if(is_latest()) exist?

I don’t remember anything like that. And I don’t even think is needed – if you have your Loop to show 1 (one) post, that’s always the latest (unless you tell it to do otherwise :).

You could probably do something like the following inside the Loop.

if ($wp_query->current_post == 0 && is_home()) // latest post
{

}

EDIT: make sure to use that code only in the front page
EDIT2: ok. I edited the code above. should be more bulletproof now.

The following solution makes my previous solution obsolete.

What you want to do is
(Before the Loop begins)
1. Get one latest post with template tag get_posts
2. Get the date of that latest post.
(Inside the Loop)
3. Compare the current post’s date with latest post’s date

So, step 1 and 2 would be…
<?php
$latest_post = get_posts('numberposts=1');
$latest_date = $latest_post[0]->post_date;
?>

and step 3…
<?php
if ($latest_date == $post->post_date) :
echo "LATEST";
endif;
?>