Year to date in 2024, the S&P 500 has surged 23% to an all-time high. If the gain holds, this year will be its 25th best year since 1928, according to data from Macrotrends. In other words, this year has been quite good for investors.
The S&P 500 is soaring, and this means that it's challenging to find quality growth stocks that are actually down -- almost everything is up. But for those willing to dig deep enough, it's possible to find a few quality growth stocks that have dropped during this bull market.
I believe shoe company Crocs (CROX -1.97%), Brazilian financial technology (fintech) business PagSeguro Digital (PAGS -1.39%), and cosmetics company e.l.f. Beauty (ELF -2.40%) are three growth stocks down 40% or more from 52-week highs that are worth buying right now.
1. Crocs: Down 39%
OK, Crocs isn't quite down 40% from its 52-week high yet. But it's close enough that I didn't want to pass up the chance to talk about it. The company's trailing 12-month revenue is up 76% in the last three years, giving it growth-stock status. And while its growth expectations for 2024 are more muted, investors could still enjoy plenty of upside.
Crocs stock trades at a really inexpensive valuation at 7 times its earnings -- that's a very good starting point for investors and a potentially good setup. But cheap stocks still need management teams that make good use of profits. Fortunately, Crocs' management has a good track record here.
With its strong profit margins, Crocs' management is diligently repurchasing shares at attractive prices and reducing its debt. Through the first three quarters of 2024, it's repaid $248 million in debt and spent $326 million on buybacks. Both of these moves boost shareholder value.
Crocs expects its full-year 2024 revenue to only be up 3% compared to 2023. That won't necessarily excite growth investors. But the steadiness of this business, coupled with strong profits and returns to shareholders, make this a compelling buy now that shares have dropped nearly 40% from their 52-week highs.
2. PagSeguro: Down 48%
PagSeguro is a Brazilian fintech company offering transaction services and credit services to both merchants and consumers. Through the first three quarters of 2024, the company's revenue is up 18% from the comparable period of 2023, showing that this growth engine keeps on humming. But investors have a dreary outlook due to fears about the Brazilian economy and a sharp increase in marketing spend, which could signal stiffer competition in the space.
While concerns are valid, investors may miss the forest for the trees. The reality is that PagSeguro's business is growing, and profits have never been higher. Adjusting into dollars, the company had net income of about $285 million through the first three quarters of 2024. That's up a whopping 31% from the same three quarters of 2023.
PagSeguro is showing growth in important metrics such as total payment volume, deposits, and clients. All this points to the long-term health of the business.
Trading at just 6 times its earnings, PagSeguro stock is even cheaper than Crocs stock. With ongoing strength in the business and the opportunity for growth, it's worth betting that investors' fears are overblown by buying shares of PagSeguro today.
3. e.l.f. Beauty: Down 44%
Unlike Crocs stock and PagSeguro stock, I wouldn't necessarily call e.l.f. Beauty stock cheap today -- its valuation still looks pricey from multiple angles even after its 44% drop. That said, this company's opportunity is so big that it may outweigh any hesitations investors might have regarding its valuation today.
The business strategy for e.l.f. Beauty is working. The company wants to be a low-price leader in cosmetics. Its products average $6 each, whereas low-price competitors average $9 and prestige products average $20. The lower price point has helped e.l.f. Beauty to take market share faster than any of the other top 20 cosmetic companies.
With $1.2 billion in trailing 12-month revenue, e.l.f. Beauty is still small enough to believe that it can grow at a fast rate for a long time. One particularly promising growth avenue is its international opportunity. As of the fiscal second quarter of 2025 (its most recent quarter), international sales only comprised 21% of its total sales. But they were growing at a stunning 91% pace, which bodes well for future growth.
As a cherry on top, e.l.f. Beauty isn't only a low-cost leader, it's also solidly profitable. Its net profit margin in the first half of its fiscal 2025 was 10.6%. If it can keep growing at a fast pace while simultaneously delivering margins such as this, I don't think the valuation for e.l.f. Beauty stock will be a problem.
On the contrary, I believe e.l.f. Beauty stock will prove to be a good buy today after its 44% drop, just as Crocs stock and PagSeguro stock are also good buys.
