Even the best growth stocks experience a decline in price. But just because their share price falls doesn’t necessarily mean the stocks are down forever. In fact, Amazon In the early 2000s, the company lost 90% of its value in two years and eventually became the nearly $2 trillion company it is today.

Let’s look at three growth stocks in the consumer goods sector that are down but far from finished.

1. Fairy Beauty

Almost 30% below its recent high, Fairy Beauty (NYSE: ELF) remains one of the best growth stories in the consumer goods space. By using influencers and by producing copies of popular prestige cosmetic products, the company has been able to gain shelf space and a large market share in the mass cosmetics space. In fact, according to consumer surveys, it has become the No. 1 cosmetics brand among teenagers.

Although growth may slow down after the rapid pace of recent years, Elf still has a long growth path ahead of it. Elf has already made great strides in international expansion, but is still only present in a few markets. The company has a disproportionate presence in the Hispanic community in the United States, so Latin America could be a big opportunity in the future.

Meanwhile, the company has only recently entered the skin care space. With only a 2% market share in the skin care space in the US, the potential to gain market share in this category is a huge opportunity. Given the company’s performance in the cosmetics space over the past few years, there is no reason to believe it won’t have the same success in the skin care space.

With a price-to-earnings-to-growth (PEG) ratio of under 0.7, this growth stock is very attractively valued after its recent sell-off. A PEG below 1 is generally considered attractive, but for a growth stock, Elf is clearly a bargain.

2. Nike

After reporting just a 1% constant currency revenue increase for fiscal 2024, which ended in May, and forecasting a mid-single-digit revenue decline for fiscal 2025, perhaps it is best to Nike (NYSE:NKE) a former growth stock. After all, it hasn’t shown much growth recently.

However, after the recent sell-off of the stock, investors can buy the cult brand at one of the cheapest valuations in a long time: the P/E ratio is below 20.

But we shouldn’t write Nike off just yet. One of the best ways for a management team to get a stock back on track is to issue extremely conservative forecasts and then sprint past the low bar. Nike appears to be doing just that.

The story continues

One reason for this is that the company is set to experience an Olympic boost, having spent more money on the event than ever before. Nike has also launched a number of new products around the event.

Meanwhile, market research firm Similarweb showed that Nike’s strategy paid off: visits to the website increased dramatically and sales increased. In China, a hot spot, the company saw an increase in sales of personalized T-shirts of tennis player Zheng Qinwen, whom it sponsors.

Given the valuation and low expectations, now might be the right time to “just do it” and add Nike to your portfolio as the company is expected to return to being a growth company.

3. Dutch brothers

Shares of Dutch brothers (NYSE: BROS) was crushed after the coffeehouse operator told investors that the number of new openings this year would be at the low end of its forecast as it looked to optimize its real estate strategy. However, the long-term outlook for the company remains bright as it still has plenty of expansion opportunities ahead of it.

The company’s store spaces tend to be small, typically between 800 and 1,000 square feet, with multiple drive-thru lanes and a pickup window. This small format allows for a relatively inexpensive build-out program while maintaining solid throughput, as evidenced by the $2.0 million average sales volume (AUV), which measures average store sales.

With just 912 locations at the end of the second quarter (612 of which are company-owned), the popular coffee chain that started in Oregon is still predominantly in the Western U.S., although it does have a few locations in places like Florida, Kentucky, and Tennessee, making it a nice success story for regional to national expansion.

The company is also just beginning to implement initiatives like mobile ordering, which should significantly increase sales. This also shows that the company is still in its early stages and is benefiting from technological improvements that many other chains have already implemented, creating future growth opportunities.

Dutch Bros is trading at a similar price-to-sales ratio (P/S) as its competitor Starbucks but should show much more growth as it is still in the early stages of expansion. For this reason, I would buy the stock on the recent weakness.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler does not own any of the stocks mentioned. The Motley Fool owns and recommends Amazon, Nike, Starbucks, and Elf Beauty. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.

3 Growth Stocks Wall Street May Be Missing, But I Am Was originally published by The Motley Fool