2 Beaten-Down Stocks to Buy and Hold for the Next 10 Years

Medtronic reported fiscal Q1 2027 revenue growth of 13.7% to $9.8 billion and adjusted EPS growth of 15.1% to $1.45, while raising full-year revenue and EPS guidance; cardiac ablation revenue surged 88% year over year. The company is also approaching Dividend King status with 49 consecutive annual dividend increases, although its shares remain down 2% year to date versus a 12% gain for the S&P 500. MercadoLibre grew Q2 revenue nearly 50% to $10.2 billion, but EPS fell to $9.19 from $10.31 as it invests in free shipping, credit cards and fintech expansion; the article argues these investments can reinforce its ecosystem and competitive moat despite the stock's 18% decline over the past year.

Analysis

MDT’s rerating case depends less on another revenue beat than on proving that growth can translate into durable segment-margin expansion after the diabetes separation. The separation could remove a lower-margin drag, but it also creates stranded-cost and execution risk; the key diligence item is pro forma operating-margin guidance rather than headline organic growth. Over the next 1-3 months, continued procedure-volume strength should support defensiveness versus broader medtech, while a 6-18 month upside case requires Hugo adoption to move from installations to recurring instrument/service revenue.

The cleaner relative expression is long MDT versus a high-multiple elective-procedure peer basket such as ISRG and SYK, not an outright beta bet. MDT has scope for multiple normalization if management demonstrates mix-led margin improvement and maintains capital returns, whereas the downside is limited only if the spin is truly tax-efficient and does not require incremental dis-synergies. Falsification: a reduction in fiscal-year EPS guidance, deteriorating cardiac-ablation growth, or separation costs that prevent operating-margin expansion.

MELI’s investment cycle should be evaluated as a credit-and-logistics underwriting issue, not merely a temporary EPS sacrifice. Lower shipping thresholds can raise order frequency and merchant retention, but only create value if fulfillment density improves enough to offset per-order delivery costs; similarly, expanded card issuance can deepen payments engagement but raises loss sensitivity if regional employment, FX, or consumer credit deteriorates. Consensus may underappreciate the tension between a stronger ecosystem and a lower near-term earnings multiple while credit provisions are rising.

For MELI, the next earnings report is the primary 1-3 month catalyst: GMV/order growth must accelerate faster than fulfillment expense and expected-credit-loss growth. A 6-18 month bullish thesis requires credit-loss ratios to stabilize as the loan/card book scales and fintech cross-sell lifts contribution profit. Falsification is two consecutive quarters of rising provisions as a percentage of fintech revenue, combined with weakening transaction growth; that would indicate subsidized growth rather than compounding network economics.

Key Decisions for Investors

• Initiate a 3-6 month long MDT / short ISRG pair, sized beta-neutral. Target 10-15% relative upside from MDT multiple normalization and lower valuation sensitivity; exit if MDT lowers EPS guidance or fails to outline pro forma margin accretion from the diabetes separation.
• Accumulate MELI only in tranches ahead of and after the next results, rather than treating the drawdown as automatically attractive. Add only if order/GMV growth accelerates while expected credit losses remain stable as a share of fintech revenue; a 15-20% further decline is plausible if provision growth outruns revenue.
• Use MELI put spreads 3-6 months out as downside protection around earnings if establishing a strategic long. The principal left-tail risk is a regional consumer-credit/FX shock that simultaneously weakens demand, raises provisions, and compresses the growth multiple.
• Monitor MDT’s Hugo installed base, procedure utilization, and recurring revenue per system as a 2027-28 catalyst watch item. Do not underwrite material robotics earnings contribution until utilization data, not placement announcements, confirms surgeon adoption.