1 Growth Stock Down 46% to Buy Right Now

As Wingstop (NASDAQ: WING) nears the 10th anniversary of its June 2015 IPO, longtime shareholders of the restaurant chain have plenty to celebrate, as the stock has returned a fantastic 972%. On the other hand, the stock's prolific flight has faced some turbulence, with shares down about 46% from their 52-week high.

The good news is that the sell-off may have helped bring the stock's previously lofty valuation down to a more palatable level. There are several reasons to believe the company's long-term growth trajectory remains on track.

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Here's why Wingstop stock could be ready to soar again and is a buy now.

A global expansion strategy

Wingstop is known for its made-to-order chicken wings served with various signature sauces. Its no-frills concept, catering to takeout and delivery orders, has proved very popular, fueling its rise as one of the fastest-growing quick-service restaurant brands in the United States of the past decade.

A large part of the company's success has been an aggressive global expansion strategy that currently counts 2,204 restaurants in the United States and 359 internationally, a combined total that has grown by 85% in the past five years. Remarkably, the chain opened 354 net new restaurants in 2024, averaging one debut each day.

Wingstop sees the potential for more than 7,000 restaurants globally through its franchise partners, a runway that highlights the allure of the stock as an investment.

Image source: Getty Images.

A transitional year for earnings in 2025

Wingstop's fourth-quarter earnings report (for the period ended Dec. 28) was impressive with revenue climbing by 27.4% year over year, propelling a 44% increase in earnings per share (EPS) to $0.92. Management noted that 2024 marked the company's 21st consecutive year of same-store sales growth, which reached 19.9% compared to 2023.

Naturally, investors may look at these headline numbers and wonder why the stock is down 17% year to date. In this case, as good as the trends appear, they also reflect a gradual slowdown from an unsustainably exceptional performance in prior quarters.

For example, the 10.1% increase in Q4 domestic same-store sales growth is down from the 21.2% pace last year. Wingstop has also been navigating food and packaging cost pressures, which are expected to continue in 2025.

That setup is reflected in muted company guidance for the year ahead, targeting "low- to mid-single-digit domestic same-store sales growth." While plans to expand the global restaurant base by 13% to 15% could lift the top-line revenue by 18% this year, earnings will be up against a tough benchmark of comparison. According to Wall Street analysts, Wingstop's 2025 EPS is forecasted at $3.77, modestly 1.9% higher than the $3.70 result in 2024.

Beyond some near-term nuances, overall Wingstop fundamentals remain solid with the bullish case for the stock that the company can outperform expectations amid a resilient economic environment.

Data source: Yahoo Finance. YOY = year over year.

The big picture is bullish

What I like about Wingstop is its differentiated restaurant concept with a sense that the company is still in the early stages of a much larger opportunity.

In the United States, approximately 40% of its restaurants are concentrated between Texas and California, suggesting multiple states are underpenetrated. Even with the company's progress in expanding internationally, with locations now in 12 countries, the segment still represents a small portion of its business. Wingstop's ability to replicate the success already achieved as it enters new regions offers confidence for continued growth.

That tailwind helps justify the stock's premium valuation, trading at a price-to-earnings (P/E) ratio of 63, clearly more expensive than the broader stock market, but in the context of a company that just posted a 57% increase in EPS last year. Notably, that P/E ratio is down from as high as 155 in 2024 and is now well below the five-year average closer to 121.

My interpretation is that Wingstop stock is attractively priced, assuming 2025 represents a transitional period ahead of stronger earnings momentum into 2026 and beyond.

WING PE Ratio data by YCharts.

A chance to buy the dip

Wingstop is a prime example that even great companies with otherwise stellar results can face stock market volatility. I predict the recent weakness is temporary, offering a chance to buy this beaten-down industry leader poised to rebound and reward shareholders long-term.

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

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Dan Victor has no position in any of the stocks mentioned. The Motley Fool recommends Wingstop. The Motley Fool has a disclosure policy.