Three Affordable Growth Stocks Currently Offering Generous Discounts
Three Affordable Growth Stocks Currently Offering Generous Discounts
In the year 2024, up until November 18th, the S&P 500 has made a significant leap of 23%, reaching an all-time high. This remarkable growth places 2024 as the 25th best year for the S&P 500 since 1928, as per Macrotrends' data. Essentially, this year has been favorable for investors.
The S&P 500's surge has made it tough to locate decent growth stocks with a decline. However, there are some potential gems hidden within this bull market, if you're keen enough to uncover them.
I am convinced that shoe company Crocs (-1.08%), Brazilian fintech firm PagSeguro Digital (1.44%), and cosmetics brand e.l.f. Beauty (6.93%) are three growth stocks that have seen a drop of 40% or more from their 52-week peaks, making them a worthwhile investment now.
1. Crocs: Dropped by 39%
Although Crocs isn't exactly at a 40% drop from its 52-week peak yet, the gap is narrow enough to warrant a discussion. Crocs' 12-month trailing revenue has experienced a growth of 76% over the past three years, earning it 'growth-stock' status. Despite reduced growth expectations for 2024, investors can still anticipate substantial returns if the trend continues.
Crocs stocks trade at a remarkably affordable price, with an earnings multiple of 7. This provides an attractive starting point for investors and a potential set-up for gains. However, inexpensive stocks need efficient management teams to maximize profits. Fortunately, Crocs' leadership has a track record of Professorwise decision-making.
Crocs' strong profit margins enable their management team to effectively repurchase shares and reduce their debt at affordable prices. As of the third quarter of 2024, they have reimbursed $248 million in debt and spent $326 million on share repurchases. Both moves amplify shareholder value.
Crocs expects its full-year 2024 revenue to only increase by 3% compared to 2023, which might not excite growth enthusiasts. However, the stability of this business, coupled with impressive profits and returns to shareholders, make this an appealing investment option today, as the stock has fallen nearly 40% from its 52-week peak.
2. PagSeguro: Dropped by 48%
PagSeguro is a Brazilian fintech company that specializes in transaction and credit services for both merchants and consumers. Through the first three quarters of 2024, the company's revenue has shown an impressive 18% growth compared to the 2023 equivalent period. Despite this continuous growth, investor sentiment has been dampened due to concerns over the Brazilian economy and the escalating marketing expenditure, which could indicate increased competition.
While these worries are understandable, they may overshadow the positive developments in PagSeguro's business. The company is experiencing growth, and its profits have never been higher. In U.S. dollars, PagSeguro's net income totaled around $285 million in the first three quarters of 2024, marking a remarkable 31% increase compared to the same quarters in 2023.
PagSeguro has shown progress in important metrics like total payment volume, deposits, and clients, all of which point towards the long-term health of the business.
PagSeguro stocks are available at an even more advantageous price than Crocs, with an earnings multiple of only 6. With ongoing growth and the chance to capitalize on investor fears, the smart move would be to buy shares of PagSeguro today.
3. e.l.f. Beauty: Dropped by 44%
Contrary to Crocs and PagSeguro stocks, I wouldn't classify e.l.f. Beauty stocks as 'cheap' even after its 44% price drop. While the potential growth is immense, the stock valuation still appears expensive from multiple angles. However, considering e.l.f. Beauty's massive growth potential, the opportunity could surpass any reservations investors might have about the stock's current valuation.
e.l.f. Beauty's business strategy boils down to being a low-cost leader in the cosmetics industry. Its average product price of $6 is significantly lower than competitors' ($9) and prestige products' ($20). The lower pricing strategy has helped e.l.f. Beauty to capture market share at a faster pace than its top 20 competitor peers.
e.l.f. Beauty currently has a trailing 12-month revenue of $1.2 billion, keeping it small enough to believe in its ability to continue growing at an accelerated rate for the foreseeable future. One promising growth avenue is its international expansion. At the end of its second quarter of 2025 (the latest financial period reported), international sales accounted for 21% of its total sales, but they were growing at a staggering 91% rate, indicating strong growth potential.
As a cherry on top, e.l.f. Beauty isn't just a low-cost market leader; it's also profitable. Its net profit margin in the first half of its fiscal year 2025 was 10.6%. If it manages to grow at a fast pace while simultaneously maintaining such impressive profit margins, I believe the steep valuation of e.l.f. Beauty stock won't be a barrier to its potential growth.
On the contrary, e.l.f. Beauty stock is an attractive investment opportunity today following its 44% price drop, just like Crocs and PagSeguro stocks are.
- Given the current market conditions, it might be challenging for investors to find profitable opportunities in the stock market, but the drop in the price of 'Crocs' stock presents an excellent opportunity for those willing to invest in growth-oriented companies. After experiencing a significant drop of 39% from its 52-week peak, Crocs' stock is now trading at an affordable price with a low earnings multiple of 7, making it an attractive investment option.
- For those looking to diversify their investment portfolio and leverage the potential for growth, the Brazilian fintech firm 'PagSeguro Digital' could be an excellent choice. Despite the 48% drop in its stock price this year, PagSeguro continues to show impressive growth in revenue and net income, creating a prospective opportunity for investors seeking to capitalize on market fears.