A Once-in-a-Decade Opportunity: 1 Super Growth Stock Down 74% to Buy Right Now and Hold for a Decade

There is no sugarcoating it: The timing on my Wingstop (NASDAQ: WING) purchases hasn't been great. I've been buying shares of the Buffalo wing franchisor over the last year while the stock's price has ranged from $150 to $210, but Wingstop has only continued to slide downward. The company now trades 74% below its 2024 high.

While I typically try to avoid doubling down on my losing investments (watering my weeds instead of my flowers, as Motley Fool co-founder David Gardner would put it), I think Wingstop is a unique case that deserves a second look. Here's what makes the once-unstoppable growth stock an interesting buy-the-dip candidate, as it trades at what appears to be a once-in-a-decade valuation.

Image source: Getty Images.

Wingstop's valuation finally makes sense

Wingstop grew its revenue by roughly 25% annually over the last decade, with same-store sales frequently in the double digits as well. Thanks to these blistering growth rates, WING stock typically traded at a lofty valuation, peaking at more than 150 times earnings and nearly 100 times earnings before interest, taxes, depreciation, and amortization (EBITDA).

WING P/E Ratio and EV/EBITDA data by YCharts

However, following five consecutive quarters of negative same-store sales (SSS), Wingstop's valuation is now quite palatable, trading at a decade-long low of 27 times earnings and 18 times EBITDA.

Plugging this 27 times earnings figure into a reverse discount cash flow calculator (Wingstop typically generates similar net income and free cash flow (FCF) figures, if not stronger FCF), Wingstop needs to grow sales by roughly 12% annually over the next decade to live up to this valuation.

That may sound overly optimistic, but management intends to grow its store count by 15%-16% in 2026 and by 10% annually over the long haul, so 12% sales growth isn't outrageous. Currently home to 3,255 stores, Wingstop hopes to reach 10,000 globally, a target that supports this growth algorithm.

That said, Wingstop needs SSS to return to growth for any of these new store expansion plans to matter, but I think brighter days are incoming for investors.

How same-store sales could turn around

Wingstop appears to be one of many excellent stocks that have been hampered by the rise of the "k-shaped economy," where more affluent households seem to be doing fine, while lower- and middle-class consumers have reined in their spending. Wingstop management noted that "more than 55% of our domestic restaurants are located in urban trade areas where households are under more financial stress than higher-income households," a trend that has weighed heavily on the stock's results over the last year.

I'm optimistic that this should prove to be a cyclical downturn, at least in the long run. First, enrollments in Club Wingstop (the company's brand new rewards program) are already 22% ahead of management's expectations. More than half of Wingstop's digital transactions are already made by Club Wingstop members, highlighting the rapid adoption of the nascent program. Success from these rewards programs should enable personalized marketing efforts and reward tiers that may help boost customer engagement and, in turn, SSS.

Second, management noted that despite Wingstop's overall SSS decline over the last two quarters, SSS grew by double digits on game days during the World Cup and NBA Finals. To me, this suggests that Wingstop's brand awareness is still quite powerful, and its SSS slowdown stems more from pressured consumers than from the company's brand being in any kind of decline. Wingstop intends to build upon the success of these group occasions on game days with its new Smart Kitchen operating platform, which improves customer satisfaction rates, and by enhancing group meal offerings marketed through its new loyalty program.

Lastly, before declining by 4% in 2025 -- and likely dropping between 4% and 6% in 2026 -- Wingstop grew SSS for 21 straight quarters. Thanks to this incredible track record, I'm willing to give the company some leeway as customers wrestle with inflation in essential products, soaring gas prices, minimal real wage growth, and a tougher macroeconomic environment overall.

That said, it seems this consumer weakness is reflected in Wingstop's reeling share price -- and once-in-a-decade valuation -- leaving investors an opportunity to buy a great compounder at a time when things look bleak. Even following the stock's recent 74% drop, Wingstop has delivered annualized total returns of 16% since its initial public offering in 2015.

WING Total Return Level data by YCharts

In my opinion, this is a top-tier compounder facing a cyclical consumer spending crunch, but the underlying brand and growth outlook remain as robust as ever. It may just take a few quarters for a turnaround to take hold. However, now receiving an all-time high 1.2% dividend yield, with payments raised for eight straight years, I'm happy to double down on the growth stock and hold for the long haul.

Josh Kohn-Lindquist has positions in Wingstop. The Motley Fool recommends Wingstop. The Motley Fool has a disclosure policy.