2 Growth Stock Down 20% To Buy Right Now

Growth stocks soared last year as investors piled into high-potential players like artificial intelligence (AI) companies. In fact, these stocks led the S&P 500 (SNPINDEX: ^GSPC), the Nasdaq Composite (NASDAQINDEX: ^IXIC), and the Dow Jones Industrial Average (DJINDICES: ^DJI) each to a double-digit gain for 2024 -- they rose 23%, 28%, and 12%, respectively. Since we're in a bull market, this isn't too surprising: Bull markets generally are favorable for companies focused on growth, as the environment makes it easier for them to expand.

But this doesn't mean every growth stock has skyrocketed. Some quality players have been left behind. And the good news is this offers you an opportunity right now to get in on top growth stocks for very reasonable prices. Two in the consumer goods space come to mind.

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Let's check out these players that have lost about 20% or more over the past year and make great buys today.

1. Etsy

Etsy (NASDAQ: ETSY) connects sellers of handmade and vintage items with buyers through its e-commerce platform. The company has grown revenue over time and is profitable. But earnings have suffered over the past couple of years as the high-interest rate environment and economic worries weighed on consumers' wallets. Since Etsy sells discretionary items, when consumers rein in spending, Etsy is likely to suffer.

Still, a couple of things make Etsy stand out as a solid long-term winner and investment. And one of these is Etsy's capital-light business model, meaning the company doesn't have to make major capital investments to grow.

For example, Etsy doesn't need to build warehouses or organize package deliveries -- the sellers that pay Etsy to use its platform take care of all of this for their own Etsy shops. As a result, Etsy can turn most of its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- about 90% in the latest quarter -- into free cash flow.

Another reason to like Etsy is for the company's ability to both keep buyers coming back and attract new buyers. Though the company has seen some small decreases in active buyers -- a 0.4% decline to about 91 million in the recent quarter -- overall, customers have remained loyal. Etsy's retention of active buyers and its addition of new buyers on a quarterly basis remain above pre-pandemic levels. These trends could strengthen as the economic backdrop improves, and it should result in growth down the road.

Considering these two points, Etsy, trading for only 10x forward earnings estimates, down from more than 16x early last year, looks like an absolute steal right now -- making it a top consumer-oriented stock to buy and hold.

2. Lululemon Athletica

Fans of comfortable and stylish leggings and other athleisure items flock to Lululemon Athletica (NASDAQ: LULU). Its focus on the quality of its products has helped it become a leader in the premium market, allowing the company to excel and build an impressive track record of profitability.

In recent years, the company's revenue and net income have climbed into the billions of dollars, and free cash flow on a trailing-12-month basis has reached more than $1.5 billion. Lululemon's managed to keep gross margin high, at more than 57% quarter after quarter over the past two years, supporting a high level of profitability.

The company has seen growth slow in the Americas, where it generates the lion's share of its revenue, but international revenue and international comparable sales both advanced in the double digits in the most recent quarter. So Lululemon's earlier plan to increase international business is working -- and the company now has put its focus on boosting U.S. sales.

And recent news from Lululemon offers us reason to be optimistic. The company reported a successful holiday season, allowing it to raise its fourth-quarter 2024 revenue, earnings per share, and gross margin guidance. The new forecast implies 11% to 12% revenue growth year over year.

On top of this, Lululemon's own actions show its confidence in its future. The company repurchased 1.6 million shares in the third quarter, and early last month, the board approved a $1 billion increase in the stock repurchase program.

Speaking of buying stock, at today's valuation, trading for 27x forward earnings estimates compared with 40x about a year ago, Lululemon stock looks like it's on sale right now.

Should you invest $1,000 in Etsy right now?

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy and Lululemon Athletica. The Motley Fool has a disclosure policy.