2 Stocks Down Over 30% to Buy Right Now and Hold for the Next Decade

The article argues that both MercadoLibre (MELI) and Axon Enterprise (AXON) remain attractively positioned after selling off ~33% from recent highs. For MercadoLibre, it cites Q1 revenue growth of 42% YoY, 84M unique active buyers (+26% YoY), and expects earnings growth around 31% annually despite a forward P/E of 44. For Axon, it highlights AI-enabled Draft One bookings of $750M+ (AI demand more than doubled) and a shift to software/SaaS, but notes near-term margin pressure from tariffs and higher software investment while management targets higher margins through 2028.

Analysis

For MercadoLibre, the market is still underestimating how much of the moat is now financed by logistics and credit rather than pure marketplace scale. That is good for retention, but it also means every incremental share gain can come with a margin tax: more shipping subsidy, more working capital, and more credit risk. The key read-through is that Latin American e-commerce is moving from a “growth at any cost” phase into a “who can fund growth cheapest” phase, which favors the best balance sheet and merchant data advantage over smaller regional peers.

For Axon, the strategic value is not the AI feature itself; it is the workflow lock-in once agencies standardize on the platform for reporting, evidence, and hardware refreshes. That creates a longer-duration annuity stream, but the transition period is where the stock can get punished because investors will tolerate near-term margin compression only if software conversion stays ahead of procurement delays. The second-order winner is likely the broader public-safety software stack; the loser is any hardware-heavy competitor that cannot match the embedded recurring-revenue model.

The contrarian point is that both names are high-quality, but quality is already expensive relative to the visibility of next-year earnings. The market is likely to react more to any sign of slowing attach rates, weaker credit metrics, or delayed margin inflection than to headline growth alone. Over the next 1-3 months, the catalyst is earnings and management commentary; over 6-18 months, the question is whether operating leverage actually reappears after this reinvestment cycle.

Key Decisions for Investors

• AXON: Buy on post-earnings weakness or use a 6-12 month bull call spread to express the software/AI lock-in thesis with capped downside; highest reward if software mix keeps expanding and margins inflect. Invalidated if bookings growth or margin guidance rolls over for two consecutive quarters.
• MELI: Accumulate on pullbacks for a 6-12 month hold, but size below normal due to valuation and LatAm macro/FX sensitivity; the stock should outperform if buyer growth and credit losses stay stable. Falsify if management leans harder on subsidies without corresponding monetization.
• Pair trade: Long AXON / short MSI over 6-12 months as a relative bet on recurring software monetization versus a more mature public-safety hardware stack. Risk is that public-sector budgets slow broadly and compress both names together.
• Alert, not recommendation: monitor MELI versus PDD/Temu competitive intensity over the next 1-2 quarters; if price competition forces a step-up in shipping incentives, the market may mark down MELI despite user growth. Use that signal to hedge or trim rather than chase the stock higher.