2 Growth Stocks Down Over 38% to Buy Right Now

Buying shares of the right growth stocks can help set you up for a happy retirement. Sometimes you get the chance to buy shares at discounts, which can be to your advantage. Here are two growth stocks that have stumbled but are still on track to deliver excellent returns for long-term investors.

1. Alibaba

Shares of Alibaba (NYSE: BABA) have surged year to date but are still down 58% from their previous highs. A slow economic recovery and increasing competition in China's e-commerce market have weighed on the company's growth.

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The stock trades at just 15 times this year's consensus earnings estimate. This is a bargain for a company that has delivered tremendous growth over the last decade and remains the dominant e-commerce and cloud computing provider in China.

Alibaba's commerce revenue, which is earned from fees on transactions and other services, grew 5% year over year in the December-ending quarter. But the company clearly has untapped growth opportunities beyond China's borders, as its international commerce business, including AliExpress, grew revenue by 32% over the year-ago quarter.

Alibaba has faced increasing competition from Pinduoduo, operated by PDD Holdings, but Alibaba is still in a solid position. Its Taobao platform has 930 million monthly active users, according to Statista.

Alibaba also operates numerous other services, including digital entertainment offerings and logistics services. The most notable of these is cloud computing, where demand for artificial intelligence (AI) services is surging. Revenue from Alibaba's cloud business grew 13% year over year last quarter. Given the triple-digit growth for AI-related products, this business could see accelerating growth over the next few years, which is a catalyst for the share price.

Importantly, Alibaba generates healthy cash flows and holds $51 billion of net cash. This provides ample resources to invest in AI and maintain its dominance in China's e-commerce market. The stock's relatively low valuation indicates substantial upside potential.

2. Deckers Outdoor

Shares of Deckers Outdoor (NYSE: DECK) have delivered outstanding returns for investors in recent years due to growing demand for UGG and Hoka footwear. The stock is currently trading down 38% from its highs, after management issued lower-than-expected earnings guidance for the current fiscal year. The dip is a great buying opportunity, given the sales momentum with its top brands.

Deckers' total revenue doubled over the last five years, and it continued that pace in the most recent quarter, with revenue up 17% year over year.

Deckers acquired Hoka in 2012. At the time, Hoka didn't contribute materially to the company's revenue, but it's become a major growth catalyst for the company. Revenue from Hoka grew 28% in fiscal 2024 (ended March 31, 2024) and 24% in fiscal Q3 2025 (ended Dec. 31, 2024). It now generates nearly a third of Deckers' total revenue.

The company has experienced expanding margins over the last several years, and this trend continued in the recent quarter. Gross margin ticked up a few points to 60.3% in the quarter. Expanding margins have driven high double-digit growth in earnings per share over the last five years. Analysts expect earnings to grow at an annualized rate of 17% in the coming years.

Hoka is still a relatively small brand in the athletic footwear market, with annualized sales of around $2 billion. Nike alone generates over $30 billion in annual footwear sales. Deckers should see many years of growth as it continues to innovate.

The stock trades at 24 times forward earnings estimates, which is reasonable for a growth stock and within its previous trading range. Assuming the company delivers on analysts' growth expectations and the stock is still trading at the same P/E, investors could double their money by 2030.

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*Stock Advisor returns as of March 3, 2025

John Ballard has positions in PDD Holdings. The Motley Fool has positions in and recommends Deckers Outdoor and Nike. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.