3 Growth Stocks Down 52% to 82% to Buy Right Now

Key Points

• This top athletic apparel brand's discounted P/E could significantly undervalue its future growth.

• This footwear maker is a proven long-term winner and looks oversold at a P/E of 16.

• This streaming giant continues to boost engagement with a compelling advertising strategy, and revenue is increasing double digits.

• 10 stocks we like better than Lululemon Athletica Inc. ›

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There are promising growth stocks trading at discounted valuations right now. Read on to learn why three Fool.com contributors believe Lululemon Athletica (NASDAQ: LULU), Deckers Outdoor (NYSE: DECK), and Roku (NASDAQ: ROKU) could be undervalued and due for a rebound.

Image source: Getty Images.

A bargain in athleisure

John Ballard (Lululemon Athletica): Lululemon is an emerging mainstream brand in athletic apparel, with revenue growing at a 19% annualized rate over the last 10 years. But tariffs on imported goods and sales weakness across the apparel industry have weighed on the company's revenue performance and share price, providing investors a great opportunity to buy the stock on the cheap.

At the recent $235 share price, the stock had slid 54% from its previous high of $516 at the end of 2023. The stock is trading at just 16 times forward earnings estimates, which I believe greatly undervalues the brand's future growth.

Lululemon still has ample room to expand globally. Its trailing-12-month revenue of $10.8 billion pales in comparison to larger rivals like Nike and Adidas, which generate $72 billion in annual sales combined.

Moreover, Lululemon has been growing faster than its larger rivals over the last five years. Lululemon posted a 7% year-over-year increase in revenue in the most recent quarter, which shows strength relative to Nike's recent sales declines. While Adidas managed to grow sales 9% last quarter, it has struggled to keep pace with Lululemon's double-digit annualized growth in recent years.

While the stock price has been cut in half, search interest on Google for "Lululemon" has doubled since 2020. This divergence between growing brand interest and a lower valuation for the stock suggests that investors are significantly underestimating the long-term growth potential of Lululemon, especially in international markets.

Economic headwinds come and go. The stock has been very volatile this year, so investors who buy will have to expect the share price to hit new lows before recovering. But with the stock trading at such a conservative forward price-to-earnings multiple, investors could see a nice return on their investment over the next five years.

An oversold footwear champ

Jeremy Bowman (Deckers Outdoor): You might be surprised but Deckers, the footwear company that owns brands like Hoka and Ugg, has been one of the top-performing stocks on the market over its history, and is up 800% over the last decade.

However, the company has hit a rough patch lately, and the stock is off 52% from its peak at the beginning of the year. A combination of slowing growth, especially in the key Hoka brand; guidance calling for declining profits in the first quarter; a decision not to give full-year guidance due to uncertainty in the market; and pressure from tariffs have all caused the stock to spiral.

In its fiscal fourth-quarter report, its most recent one, the company said that tariffs would add $150 million to its cost of goods sold this year, a substantial headwind for a business set to bring in around $5 billion in revenue. It also sees earnings per share falling from $0.75 to between $0.62 and $0.67 in the first quarter.

There's no question that Deckers is facing short-term headwinds, made worse by the uncertainty around tariffs, but the company has a strong track record with developing brands and steadily growing them, and it's overcome earlier slowdowns at Ugg.

The company also has the potential to develop new brands over the longer term, and it still expects top-line growth, calling for 9% revenue growth in the first quarter and double-digit growth in Hoka for the full year.

At a price-to-earnings ratio of 16, Deckers looks oversold. If it can return to steady growth on the bottom line, the stock looks like a winner.

The ad-supported streaming model

Jennifer Saibil (Roku): Although Roku looked like it was poised for massive success when adoption accelerated under pandemic lockdown orders, the unfortunate aftermath has been slowing growth and heavy losses. It's been challenging for the company to smooth out the business and begin moving forward again, and the market lost patience with it quickly.

However, throughout the difficult time, the company has maintained its dominant position in ad-supported streaming and reported growth. It's pushed through, and the results are starting to pay off. In the 2025 first quarter, revenue increased 16% year over year, with strength in the platform segment. That's mostly the advertising business, its larger segment at 86% of the total.

The company has a clear and specific strategy to generate engagement with its own Roku channel, where much of the advertising magic happens, and it became the second-most watched channel in the U.S. on its network in the first quarter, with an 84% increase in viewing hours year over year.

Management has tweaked the user experience to boost Roku channel viewership, and its home screen content row has been the main entry point to the channel. It's using a powerful artificial intelligence strategy to provide content suggestions on the content row, and a third of households streamed from the content row in the first quarter, driving ad reach and subscription sign-ups.

Recently, Roku excited investors with the announcement of a partnership with Amazon. The two are collaborating to offer advertisers greater reach across the two platforms, and the AI-enabled network facilitates broad but accurate exposure, with more targeted viewers at the same budget.

Roku stock is 82% off its all-time highs, but it's up 40% over the past year. It's making its way back slowly, and now's a good time to get in on the ride.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has positions in Amazon, Nike, and Roku. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Deckers Outdoor, Lululemon Athletica Inc., Nike, and Roku. The Motley Fool has a disclosure policy.