3 Growth Stocks Down 30% to Buy Right Now

There are plenty of quality stocks on sale these days. You probably know that just by sizing up your own portfolio. There's often a kernel of truth to every markdown, but sometimes the pessimism gets overdone.

MercadoLibre (NASDAQ: MELI), Dutch Bros (NYSE: BROS), and Lululemon (NASDAQ: LULU) are trading more than 30% below their recent highs. They are well positioned to bounce back, making them stocks to consider buying now.

Image source: Getty Images.

1. MercadoLibre: down 36%

Latin America's leading player in e-commerce and fintech hit a 52-week low last week. That doesn't seem fair, considering MercadoLibre has delivered revenue growth of at least 37% for seven consecutive years. The 45% top-line jump it recently posted in the fourth quarter represents back-to-back reports of acceleration.

You can knock MercadoLibre stock in a market downturn, but it doesn't stay that way for long. MercadoLibre has a long track record of growth. The bottom line is growing even faster, but it can be erratic. Its profitability stumbled in its latest quarter, with operating expenses spiking 50%, but historically those blips have been temporary.

The stock may not seem cheap, trading for 30 times this year's earnings and less than 22 times next year's profit target. There's also some degree of uncertainty at the helm, as co-founder Marcos Galperin stepped down in January. There is comfort, however, in knowing that new CEO Ariel Szarfsztejn has been a MercadoLibre executive for almost a decade. He was the architect of MercadoLibre's logistics business. The market isn't buying it right now, but you can.

The long-term market investments that it's making now -- and the promotional efforts to fend off e-commerce competition in Brazil -- will pay off in the future. Picking up MercadoLibre at its lowest level since the summer of 2024 seems opportunistic.

2. Dutch Bros: down 39%

There are plenty of retail food and beverage chains struggling these days. Dutch Bros isn't one of them. Last month, the company reported 29% revenue growth in its latest quarter. It was a blowout quarter. In an era when consumers are clutching their disposable income, Dutch Bros isn't having any trouble growing its business. Comparable-store sales have now risen for 19 consecutive years.

This impressive run is still going strong. Expansion played a big part in the beverage chain's top-line jump, but average store-level sales rose 7.7% in its latest quarter. This isn't a bottom-line story just yet, but net income did more than quadruple in the fourth quarter.

The big takeaway here is that Dutch Bros has its pulse on the retail beverage market, particularly the young consumers drawn to the chain's wide variety of sugary drinks. At a time when traditional coffee-brewing baristas are struggling, Dutch Bros is cultivating an audience that may stay true to the rising brand for several more decades. Buying the stock on the dip sounds like another great way to quench your thirst for growth.

3. Lululemon: down 55%

The athleisure specialist didn't just hit a 52-week low on Friday. Lululemon hit a five-year low. Unlike MercadoLibre and Dutch Bros, Lululemon isn't posting double-digit revenue growth right now. The seller of premium yoga gear has delivered single-digit top-line growth in five of its last six quarters. But revenue growth isn't the real problem here.

There's no sugar-coating the situation: Analysts expect profitability to decline slightly in the fiscal year that recently ended and the one ahead. Margins are contracting, too, but the modest sales rise should continue through the lull. The good news is that the stock is still cheap as you wait for the bottom-line turnaround. It's trading for 12 times trailing earnings and less than 13 times next year's analyst target.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dutch Bros, Lululemon Athletica Inc., and MercadoLibre. The Motley Fool has a disclosure policy.