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

Medtronic delivered a beat-and-raise fiscal Q1 2027, with revenue up 13.7% year over year to $9.8 billion and adjusted EPS up 15.1% to $1.45; cardiac ablation revenue surged 88%. The company raised full-year guidance, plans to separate its lower-margin diabetes unit, and has increased its dividend for 49 consecutive years, although 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 free-shipping and fintech-credit investments weighed on margins; the article views these investments as supportive of its competitive moat and long-term growth.

Analysis

MDT’s valuation re-rating depends less on the dividend milestone than on whether electrophysiology growth can offset slower legacy-device categories without requiring sustained commercial spending. The key second-order read-through is competitive: durable procedure-share gains would pressure Boston Scientific (BSX) and Johnson & Johnson’s electrophysiology franchises, while Hugo uptake is a long-duration challenge to Intuitive Surgical (ISRG), not a near-term earnings event. The planned diabetes separation could lift the remaining company’s margin multiple, but only if stranded costs, tax leakage, and TSA expenses are below the benefit implied by management’s portfolio logic.

MELI is deliberately exchanging current margins for lower customer acquisition friction and a deeper credit relationship. That can produce a powerful flywheel if incremental shipping subsidies create repeat purchasing and credit-card users migrate into Mercado Pago, but the market will penalize the stock if contribution margins fail to recover after investment intensity peaks; this is especially relevant against Sea Ltd.’s Shopee (SE), Amazon’s regional expansion, and local fintechs Nu Holdings (NU) and StoneCo (STNE). The underappreciated risk is that faster credit-card penetration changes MELI’s earnings sensitivity from retail demand toward consumer-credit losses, funding costs, FX volatility, and regulatory capital requirements.

Over the next 1-3 months, MDT has the cleaner catalyst path through confirmation that procedure growth converts to operating leverage and no dilution from the separation timeline. MELI requires more patience: the relevant 6-18 month catalyst is evidence that logistics and fintech investment produces higher cohort retention and merchant monetization rather than simply defending GMV. Consensus may be too willing to annualize MELI’s margin pressure as structural, but equally too willing to treat revenue growth as proof of economic value before credit-vintage performance is disclosed.

Key Decisions for Investors

• Initiate a 6-12 month long MDT position versus a short ISRG basket only after MDT confirms stable legacy-segment growth and reiterates separation economics; target a relative 10-15% move if Hugo adoption improves, with thesis invalidated by margin-guidance cuts or material separation-cost escalation.
• Maintain MELI as a watch-list accumulation rather than chase the growth narrative: add only following evidence of sequential stabilization in EBIT margin and credit-loss ratios. A 12-18 month long has attractive upside if investment spending normalizes, but reduce or avoid if non-performing-loan trends rise materially for two quarters.
• For a higher-conviction relative-value expression, long MELI / short SE over 6-12 months is preferable to an outright MELI long if Mercado Pago monetization improves, because it isolates Latin American ecosystem execution from broader emerging-market e-commerce multiple risk. Exit on MELI cohort-retention deterioration or a material acceleration in Shopee’s regional subsidy intensity.
• Do not position around the dividend anniversary alone in MDT; monitor free-cash-flow conversion and post-separation leverage. A payout increase unsupported by cash conversion would be a negative capital-allocation signal rather than a catalyst.