3 Magnificent Stocks to Buy Before 2027 and Hold for a Decade

The S&P 500 (SNPINDEX:^GSPC) is retaining most of its gains this year despite significant economic volatility and political change. Excitement about artificial intelligence (AI) and confidence in the economy are strong growth drivers, and the market has been rallying after a post-election drop.

But not every stock is enjoying a strong run this year. And while stocks that drop can scare investors, that's where you can often find the best opportunities. Dutch Bros (NYSE:BROS), MercadoLibre (NASDAQ:MELI), and On Holding (NYSE:ONON) are all plunging this year, but they have fantastic long-term potential.

Here's why these three stocks could be great additions to your portfolio.

Image source: Dutch Bros.

1. Dutch Bros: Down 43%

Dutch Bros is a small coffee shop chain with big ambitions. It has created a unique model with exclusive customer beverages and a store portfolio that's mostly drive-thrus, and it has attracted a large customer base that keeps coming back for more.

Part of the company's success comes from its menu, which leans toward the sweet and cold, setting it apart from the classic coffee shop. People also love its friendly customer service and focus on speed.

Management has been at the forefront of beverage innovation, including being the first major chain to offer boba when it became popular two years ago and launching its own line of Myst healthy energy drinks.

Revenue increased 30% year over year in the third quarter, and same-shop sales were up 4.4%. Net income increased from $27.3 million to $37.2 million.

Dutch Bros has 1,273 locations as of the end of the third quarter, and management says it has visibility to reach its goal of 2,029 stores by 2029. That's nearly double today's count, which could lead to doubling revenue over the next four or so years from new stores alone.

The market, however, was disappointed by the lowered full-year guidance. Management is navigating inflation and higher costs, which are impacting the business from top to bottom.

However, the long-term outlook is very strong, and Dutch Bros should reward shareholders who hold for the long term.

2. MercadoLibre: Down 25%

MercadoLibre operates the largest e-commerce business in Latin America as well as a thriving financial platform, including what it expects to become the largest digital bank in Mexico.

Sales consistently grow at a high pace, including a 45% year-over-year increase in the third quarter, driven by a 38% increase in gross merchandise volume and a 53% increase in total payment volume.

The growth is across metrics and businesses. Unique active buyers were up 22% year over year, while items sold per buyer increased 14%. Monthly active fintech users rose 29% over last year, and the credit portfolio was up 62%.

Management is working hard to capture the nascent opportunity as Latin America slowly embraces e-commerce and digital finance. It lags behind other global regions in both areas, yet many of its markets are digitally fluent.

It has many levers to pull to generate higher engagement and growth, including its recently launched Meli+ membership program and a lower free shipping threshold in Brazil. Management is seizing a ripe opportunity to invest for the future, and that's been impacting the bottom line: The operating margin fell from 9.8% last year to 6.3% in the third quarter this year.

The company says that the investments today will lead to a level of scale that will generate even higher profitability, and MercadoLibre stock looks like an excellent buy on the dip.

Image source: On Holding.

3. On Holding: Down 25%

On is a growing athletic wear company that's become popular with affluent shoppers who are more resilient under pressure. The company has been reporting double-digit growth despite inflation, outdoing most of its major competition.

In the third quarter, sales increased 17% year over year, and management reiterated its full-year guidance of low-20s growth. While competitors are struggling to sell in the inflationary environment and forced to mark down inventory, On's gross margin was 72.6% in the quarter, or 66.9% without a tariff refund.

At its recent Investor Day, management said it's significantly ahead of the goals it set for itself at its 2023 Investor Day. It outlined its path to maintain a 65% gross margin through 2029, and in the third-quarter report, it raised the 2026 target to 66%.

On has a growing, resilient business and tons of long-term opportunity, and now is a great time to buy On stock.

Jennifer Saibil has positions in Dutch Bros, MercadoLibre, and On Holding. The Motley Fool has positions in and recommends Dutch Bros, MercadoLibre, and On Holding. The Motley Fool has a disclosure policy.