Investing in quality stocks while they are down is a great way to earn superior returns over the long run.
The three stocks below face challenges, but they could handsomely reward patient investors down the line.
Broader equities have been resilient this year. Despite many challenges, the S&P 500 has climbed by a healthy 7% to date. However, some stocks haven't been so lucky and are experiencing steep declines due to company-specific issues. Take HCA Healthcare (NYSE: HCA), MercadoLibre (NASDAQ: MELI), and Visa (NYSE: V). All three of these corporations may be leaders in their respective industries, but they have faced obstacles that have sent their share prices down. But the good news is that HCA Healthcare, MercadoLibre, and Visa are all worth serious consideration on the dip. Let me explain.
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HCA Healthcare performed well last year, but things are looking very different in 2026 for the healthcare facility operator. Its shares have fallen partly due to various economic challenges affecting its financial results. We aren't out of the woods yet, either. Inflation remains high, some economists still fear a recession may be coming, and although geopolitical tensions have eased, that may or may not last. Even in this shaky environment, though, HCA Healthcare is a top pick for long-term investors.
Here are three reasons why. First, HCA Healthcare is a leader in its niche and boasts a large network of facilities throughout much of the U.S. The industry is protected by steep barriers to entry, including the high upfront costs of building facilities and the various regulatory hurdles companies must navigate. HCA Healthcare has an advantage as an established industry leader.
Second, even among its peers, HCA Healthcare has imposed itself. The company has increased its market share over the years, partly thanks to improvements in cutting-edge technology that attract patients. Third, HCA Healthcare should benefit from secular tailwinds, such as the world's aging population, which will drive increased demand for its services. All these factors (and more) make the stock an attractive one to buy on the dip and hold onto for a while.
MercadoLibre has faced increased competition in the e-commerce market in Latin America in recent years. The company has responded by investing heavily in various initiatives that management thinks will eventually pay rich dividends. Unfortunately, the spending is leading to lower profits and margins in the short term, and many investors aren't happy about that. It is one of the key reasons the stock has underperformed broader equities over the past 12 months.
But is that really justified? After all, MercadoLibre is looking to tap into massive opportunities. For instance, as the company argues, many people in the regions it operates are underbanked. It has poured money into expanding its financial services. That won't pay off immediately -- at least not in terms of stronger margins -- but over the long run, it could help MercadoLibre establish itself as a leading financial institution.
MercadoLibre has also invested in initiatives that have proven successful, such as lowering the threshold for free shipping on its e-commerce platform. This can help boost the company's gross merchandise volume and sales and expand its ecosystem, even with lower profits in the near term. Elsewhere, MercadoLibre is ramping up high-margin opportunities, such as its advertising business. My view is that the sell-off is overdone, and given MercadoLibre's current efforts, the company is likely to bounce back eventually and offer excellent returns to patient investors.
Visa is facing headwinds due to legal and regulatory challenges. It is the subject of an antitrust lawsuit in the U.S. Also, a proposed bill aims to break the duopoly it holds with Mastercard (NYSE: MA). There is no question that these obstacles make the company's prospects somewhat uncertain. However, if we put all that aside for a second, Visa's business remains strong. The company's financial results have been solid, and it holds a wide moat due to network effects, as customers and businesses increasingly seek one another within the company's ecosystem of credit and debit cards, whose transactions it helps process.
The more cards in circulation with Visa's logo, the stronger its network effect. Meanwhile, Visa is still looking at a large worldwide opportunity to bring cash and check transactions into its ecosystem, while it could also benefit from the growth of the e-commerce industry, where digital payment methods are the norm.
Legal issues likely won't completely go away, but it's worth noting that antitrust lawsuits don't have a great track record of breaking up businesses in the U.S., as we recently saw with the Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) case. And although a proposed bill could disrupt the company's operations, there is also no guarantee it will pass. Investors should definitely keep those potential headwinds in mind, but Visa could still generate outstanding returns over the long run. The company lagging broader equities over the past year -- despite strong financial results -- suggests the challenges it faces are already somewhat baked into the stock price. That's why its shares are still worth buying.
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Prosper Junior Bakiny has positions in Alphabet, Mastercard, MercadoLibre, and Visa. The Motley Fool has positions in and recommends Alphabet, HCA Healthcare, Mastercard, MercadoLibre, and Visa. The Motley Fool has a disclosure policy.