Growth stocks, particularly those that thrived at the peak of the coronavirus pandemic, largely fell out of style in 2021. But for many of these companies, that merely amounts to a minor inconvenience in the grand scheme of things.

As long as a company's investment thesis remains intact, whatever the market does in the short term shouldn't be of too much concern. Investors should keep their eyes on the prize and stick to a buy-and-hold strategy.

With that in mind, let's look at two growth stocks that appear well-positioned to deliver above-average returns for many years to come: DexCom (DXCM 1.69%) and MercadoLibre (MELI -1.65%)

DXCM Chart

DXCM data by YCharts

1. DexCom

DexCom is a medical device company that focuses on helping diabetes patients achieve better health outcomes. The company currently generates most of its revenue from its G6 continuous glucose monitoring (CGM) system, which helps those with diabetes keep track of their blood glucose levels.

The company's G6 includes a sensor (inserted beneath the skin) along with a transmitter and an accompanying touch-screen device that gives patients blood glucose readings. Increased adoption of CGM technology has been a significant driver behind DexCom's top-line growth in recent years.

Business was excellent last year. In the first nine months of 2021, the company's revenue increased 28.9% to $1.8 billion over the prior-year period while net income jumped 25.8% to $174.1 million. 2022 promises to be another excellent year. In the fourth quarter, the company submitted its G7 CGM device -- the successor to the G6 -- to health authorities in the U.S. for review.

Regulatory clearance for the G7 could come sometime this year. This device is an improvement over the G6, according to the company. In a clinical trial that enrolled more than 300 diabetes patients and compared more than 39,000 readings by the G7 to those taken manually with blood glucose meters, the G7 fell within 20% of the confirmed blood glucose level 93% of the time.

DexCom's family of devices.

Image source: DexCom.

During a recent conference call, DexCom's CEO Kevin Sayer said:

The performance of this product is something I never thought I would see in nearly 30 years in this business. With a sample size this large, there is absolutely no doubt as to how this system will perform. The results are much superior to the G6 and any competitive product in the market.

Meanwhile, there is significant room in the CGM space. In the U.S., DexCom estimates that the market for patients with type 1 diabetes is less than 50% penetrated while the market for type 2 diabetics who require intensive insulin therapy is less than 25% penetrated.

These numbers are lower in most other countries since the U.S. is a global leader in the adoption of this technology. Further, the number of people with diabetes unfortunately is projected to keep rising. That gives plenty of fuel to DexCom's growth engine.

The company's shares managed to outperform the market in the past year despite the sell-off they experienced in the final few weeks of 2021. Given its strong standing in an industry ripe for growth, expect this healthcare stock to continue performing well for many years to come. 

2. MercadoLibre

MercadoLibre was a big casualty of last year's shift away from growth stocks. While the e-commerce platform's business was booming at the pandemic's onset, its shares grew too much too fast amid the worst of the outbreak, and marketwide worries toward the end of 2021 led to a correction.

But MercadoLibre's investment thesis remains intact. As the leading e-commerce company in Latin America, it boasts an entire ecosystem of complementary services its clients have come to appreciate. The company's main marketplace is backed by its fintech platform, Mercado Pago, which helps facilitate transactions on the website -- and much else besides.

Then there is the company's Mercado Envios, which provides sellers on its platform with warehouse and fulfillment solutions. Mercado Shops is yet another one of MercadoLibre's offerings that allows sellers on its platform to open and manage online storefronts.

Two people in front of a laptop.

Image source: Getty Images.

Thanks to this convenient menu of services, MercadoLibre's ecosystem has high switching costs. It's difficult for customers (especially sellers) to jump ship. It also benefits from the network effect. Both sellers and buyers have a lot to gain as more members of both groups join MercadoLibre's marketplace.

MercadoLibre's financial results continue to impress. In the third quarter, the company's net revenue soared 66.5% year over year to $1.9 billion. That was on the back of a 23.9% increase in the company's gross merchandise volume -- the total value of transactions conducted on its platform -- which came in at $7.3 billion. Meanwhile, the company's net income increased to $95 million, up from the $15 million it reported during the year-ago period.

While it has become the dominant player in Latin America, MercadoLibre still has significant room to grow in that region. And given the vast suite of services it offers, it will be hard for competitors to eat into the tech giant's market share. That's why MercadoLibre looks like a company to buy and hold for a very long time.