Marketwide challenges, like those created by President Donald Trump's tariff policies, cause many investors to shift their focus to the short term -- leading to panic-selling and a spiraling stock market. While it's a perfectly human reaction to volatility, it's a tendency investors should avoid. The algorithm most conducive to outsize returns in equity markets remains the same, and it includes holding shares of top companies for the long haul.
So even in these challenging times, it's a good idea to look for stocks worth investing in for the next decade and beyond. Here are two great examples: MercadoLibre (MELI +0.41%) and DexCom (DXCM 3.66%).
NASDAQ: MELI
Key Data Points
1. MercadoLibre
While broader equities are struggling, MercadoLibre has performed well this year; the stock is up by 25%. Here's one potential reason: MercadoLibre is the leading e-commerce platform in Latin America. Its full suite of products includes a fintech arm, a logistics business, and a service that enables merchants to set up online storefronts.
Because it's focused almost exclusively on serving customers in South America, MercadoLibre won't see much of a direct impact from the Trump administration's tariffs. True, the current situation could eventually lead to more severe economic challenges down the road, even in countries besides the U.S. Perhaps discretionary spending will decline, which could affect MercadoLibre. Even so, the e-commerce specialist looks better-equipped than most to perform well in this shaky environment.
Meanwhile, MercadoLibre's financial results remain excellent. Revenue growth has been strong for a long time, while earnings have increased significantly in recent years:
MELI Revenue (Annual) data by YCharts.
MercadoLibre is benefiting from the growth of e-commerce, and that's not likely to stop anytime soon. Analysts continue to predict that the global e-commerce industry will remain on a solid northbound path at least through the end of the decade. Precise projections may be challenging beyond that, but e-commerce has too many benefits not to continue taking up a larger percentage of retail commerce. And while all that's going on, it will be hard for any company to disrupt MercadoLibre's empire.
The company has an established logistics presence in the region, has built a reputation for the kinds of services it offers, and benefits from the network effect and switching costs. That's why even Amazon failed to impose itself in Latin America, where MercadoLibre dominates. Any company that can fend off competition from Amazon is probably doing something right. MercadoLibre looks likely to continue doing that thing for a while; in the next decade, the stock should provide superior returns to patient investors.
NASDAQ: DXCM
Key Data Points
2. DexCom
Dexcom, a leader in diabetes-focused medical devices, markets innovative continuous glucose monitoring (CGM) systems. Keeping track of blood-sugar levels is incredibly important for diabetics, particularly for those who take insulin. Unlike blood glucose meters, CGMs allow diabetes patients to check their blood sugar levels automatically and continuously throughout the day and night, which leads to better health decisions and improved outcomes.
DexCom's portfolio of devices includes the latest in its G-series, the G7, and the DexCom One, an option it launched in some countries to cater to more price-sensitive customers. Last year, it also launched an over-the-counter CGM option in the U.S. for type 2 diabetes patients who don't take insulin.
Over the next decade, DexCom should have several growth drivers. Let's consider three.
First, CGM penetration continues to lag behind the existing covered patient population. As DexCom makes more progress in this market, its results will continue to move in the right direction.
Second, there will be increased coverage. Third-party payers have been more willing to foot the bill, considering the better outcomes that diabetes patients see with CGM.
Third, DexCom will expand its presence in other countries. The company has routinely increased its addressable market by entering new regions. Considering that fewer than 1% of diabetes patients have access to CGM technology, there's a massive worldwide opportunity for DexCom.
This playbook has allowed it to generate excellent financial results and stock performance over the past 10 years:
DXCM Revenue (Annual) data by YCharts.
Even with some impact from tariffs and stiff competition from its biggest rival, Abbott Laboratories, DexCom's future looks bright thanks to a massive growth runway. That's why investors should hold the company's shares through market volatility.
