What Are 5 Great Growth Stocks to Buy That Are Down 20% or More?

While the market has returned to new highs, not every growth stock has rebounded at the same pace. Five stocks still down 20% or more from all-time highs that look attractive are Advanced Micro Devices (AMD -0.45%), GitLab (GTLB 2.73%), e.l.f. Beauty (ELF 1.21%), Dutch Bros (BROS 1.74%), and Cava Group (CAVA 4.96%).

Let’s look at what each of these five discounted growth stocks brings to the table.

Happy person sitting with phone and laptop.

Image source: Getty Images.

1. Advanced Micro Devices (down 35% from high)

While AMD remains a distant second to market leader Nvidia in graphics processing units (GPUs), it’s starting to carve out a meaningful niche in artificial intelligence (AI) inference. That’s important because the inference market is expected to become larger than AI training over time, and AMD’s cost-effective chips are starting to gain traction.

On its latest earnings call, management said one of the largest AI-model companies is now using its GPUs for a large share of its daily inference workload. Major cloud providers are also turning to AMD chips for AI tasks like search and recommendation engines.

The company already has a leadership position in data central processing units, and its overall data center revenue has been growing strongly. Last quarter, its data center segment soared 57%, helping total revenue climb 36%. AMD doesn’t need to unseat Nvidia in the GPU space, it just needs to gain a modest share to drive outsized growth from its smaller base. Given the pullback in the stock, the setup here looks attractive.

2. GitLab (down 65% from high)

GitLab has become one of the most important players in secure software development. Its DevSecOps platform is helping developers build, test, and deploy applications more efficiently in a secure environment, and its recent GitLab 18 launch only strengthens that position. The release includes over 30 new enhancements, including the GitLab Duo Agent Platform, which deploys AI agents across the entire software development life cycle, not just for code but also for documentation, testing, and compliance.

The company is seeing solid growth both from existing customers and new ones. Last quarter, its revenue climbed 27% year over year, while its dollar-based net retention rate was a robust 122%. Much of this growth is coming from existing customers expanding seats and upgrading to higher-tier plans.

While some investors fear that AI will lead to fewer coders over time, thus far, AI has led to an increase in both software development and the number of coders. GitLab stock has fallen too much on this fear, and it looks well-positioned moving forward.

3. e.l.f. Beauty (down 40% from high)

After a red-hot run, e.l.f. shares cooled off after the company’s revenue growth slowed significantly to just 4% in its fiscal Q4. However, its recent $1 billion acquisition of Hailey Bieber’s Rhode brand has the potential to reaccelerate growth in a big way.

Rhode has already hit $212 million in annual sales with just a handful of products on its website and minimal marketing. With e.l.f.’s strong relationships at Ulta Beauty and Target and Rhode’s recent Sephora rollout, e.l.f. has the opportunity to put the brand in front of a lot more consumers. Bieber staying on as chief creative officer ensures brand continuity, and Rhode brings with it premium price points and a strong skincare lineup, which is an ideal complement to e.l.f.’s core mass-market cosmetics strength.

e.l.f. has already proven it can take a lot of market share in mass-market cosmetics, and Rhode adds a big potential growth driver. The company also continues to have opportunities with skincare, international expansion, and potentially moving into other adjacent categories like fragrance over time.

4. Dutch Bros (down 21% from high)

Dutch Bros is still in the early innings of what looks like a multi-year growth story. The drive-thru coffee chain now has over 1,000 locations but sees room for 7,000 over the long term. It’s targeting 2,029 shops by 2029, which would still leave it with a long growth runway next decade as well.

Expansion is not the only story with Dutch Bros, though. It’s also had strong same-store sales growth, and has an opportunity to continue to ramp it up. Last quarter, its same-store sales rose 4.7%, while company-owned comps climbed 6.9%. However, mobile ordering has just recently been rolled out, and the company has just begun piloting food items. Dutch Bros has admitted that a lack of breakfast offerings has likely cost it sales, and rival Starbucks has shown just how important food items can be, with food representing 19% of its sales last quarter.

Between an opportunity to grow same-store sales and expand its store base, Dutch Bros has a lot of long-term growth ahead of it.

5. Cava Group (down 43% from high)

Another strong growth story in the restaurant space is Cava. The Mediterranean restaurant operator has posted four straight quarters of double-digit same-store sales growth, including 10.8% last quarter. More impressively, traffic was up 7.5%, showing that customers are coming in more frequently despite price increases.

Higher-priced add-ons like pita chips and fresh juice are boosting ticket sizes, and the company is experimenting with new menu items and a tiered loyalty program to keep customers coming back. However, like Dutch Bros, Cava is very much an expansion story.

The company added 15 new restaurants last quarter and plans to open 64 to 68 new locations this year. With just 382 total restaurants as of the end of last quarter and a target of 1,000 by 2032, there’s a long runway ahead. Its expansion strategy, dubbed the “coastal smile,” has worked well, and a recent push into the Midwest with markets like Detroit and Chicago should accelerate growth even further.

Geoffrey Seiler has positions in GitLab, LVMH Moët Hennessy – Louis Vuitton, and e.l.f. Beauty. The Motley Fool has positions in and recommends Advanced Micro Devices, GitLab, Nvidia, Starbucks, Target, Ulta Beauty, and e.l.f. Beauty. The Motley Fool recommends Cava Group and Dutch Bros. The Motley Fool has a disclosure policy.

Source link

Visited 1 times, 1 visit(s) today

Related Article

Fire erupts after Israeli strikes in Gaza

Gaza ceasefire talks set to resume in Doha as Israeli airstrikes continue in the Strip

Indirect negotiations between Israel and Hamas for a possible ceasefire in Gaza are set to resume Sunday in Doha amid the backdrop of continued deadly Israeli attacks in the Strip. Israeli airstrikes killed at least 38 Palestinians in Gaza, hospital officials told the Associated Press on Sunday, as Israel’s military said it has struck over

A gold bull figurine sitting on stacks of hundred dollar bills.

The S&P 500 Is Soaring: 3 No-Brainer Vanguard ETFs to Buy Right Now

The S&P 500 (^GSPC 0.83%) reached a new all-time high in late June, soaring by more than 26% from its low point in April, as of this writing. Many investors are optimistic that the market will continue climbing, making right now a fantastic opportunity to load up on quality stocks. ETFs are a simple way to

White House suggests some countries could see tariff deadline shifted

White House suggests some countries could see tariff deadline shifted

Chair of the White House Council of Economic Advisers Stephen Miran said that some countries that are negotiating with the United States in good faith could see tariffs delayed as President Donald Trump’s deadline to strike trade deals closes in. Speaking with ABC News’ “This Week” anchor George Stephanopoulos, Miran hedged on what deals are

Today's Wordle answer for Sunday, July 6 - ATRIA

Clues and answer for Sunday, July 6

Hey, there! Sunday is upon us and that just about brings the weekend to an end. When it comes to your Wordle streak though, we hope that doesn’t peter out for a very long time. To that end, here’s our daily Wordle guide with some hints and the answer for Sunday’s puzzle (#1,478). It may

Health Check

Breakthrough gene therapy jab reverses hearing loss in weeks

Sign up for our free Health Check email to receive exclusive analysis on the week in health Get our free Health Check email Get our free Health Check email A single jab of a breakthrough gene therapy could reverse hearing loss in people within weeks, according to new research. The cutting-edge therapy improved hearing in

30 people have been confirmed dead so far in Texas following flash floods.

MAGA Congressional Candidate Kandiss Taylor Calls Texas Floods ‘Fake’: It’s ‘Murder’

A MAGA congressional candidate is facing backlash after spreading conspiracy theories about the deadly flash floods along the Guadalupe River in Texas. Kandiss Taylor, who is running to represent Georgia in the House of Representatives, posted on X Saturday: “Fake weather. Fake hurricanes. Fake flooding. Fake. Fake. Fake.” Her bizarre post came as authorities searched

0
Would love your thoughts, please comment.x
()
x