2 Growth Stocks Down 45% or More to Buy in May

John Ballard, The Motley Fool

Thu, May 1, 2025, 2:25 AM 5 min read

Key Points

Cava Group achieved 35% revenue growth in 2024, and it's just getting started.
A $10,000 investment in Deckers stock would be worth $6 million today, and it's still going strong.

Investing in growth stocks can help you build tremendous wealth for retirement. Many top growth stocks have fallen this year as Wall Street worries about a recession. For an investor focused on the long term, this can work to your advantage by being able to invest in strong companies at lower valuations.

There are some up-and-coming restaurant and apparel brands that are still in the early innings of their long-term growth to consider buying right now. Here are two trading well off their highs that should make rewarding investments.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

1. Cava Group

Cava (NYSE: CAVA) is one of the fastest-growing restaurants out there. Cava's recent growth is showing that there is a pent-up demand for healthy fast-casual dining that could make it the next multibagger restaurant stock.

Cava capped off an incredible first year as a public company. Full-year revenue grew 33%, not only fueled by new restaurant openings but strong traffic trends. Same-restaurant sales were up 13% last year and accelerated to 21% in the fourth quarter.

Importantly, Cava is already reporting profit margins in line with Chipotle Mexican Grill, which is a world-class restaurant business. Cava's profit margin hit 13% last year, indicating tremendous earnings growth potential as it continues to open more restaurants and achieve greater scale.

Cava still has a long way to go. It opened 15 new restaurants in Q4 and ended the year with 367 locations. It expects to open between 62 to 66 new locations in 2025, on the way to more than 1,000 by 2032 -- and that's just the U.S. target.

The stock is trading 45% off its highs at the time of writing. The shares soared last year and had gotten ahead of the actual growth of the business, trading at an expensive 19 times sales at the recent high. It now trades at a more reasonable 11 times sales.

Economic uncertainty may slow Cava's growth in the near term, but I wouldn't let that keep me from buying shares. After all, investors pay a high price for a cheery consensus. The low expectations for near-term growth are giving investors the chance to invest at a better value point that should set up great returns over time.

2. Deckers Brands

Deckers (NYSE: DECK) is the company behind the popular footwear brands Hoka and UGG. The stock has been a phenomenal performer. A $10,000 investment in the stock in 2002 would be worth $6 million today. You don't have to bet on trendy tech stocks to build wealth in the stock market. You just need to invest in growing companies at reasonable prices, and Deckers still has enough growth ahead to fuel market-beating returns.

Wall Street is worried about the near-term impact on sales from a recession. But Deckers' recent guidance to deliver roughly 15% sales growth for fiscal 2025 means it is taking market share from big brands like Nike, which is struggling right now.

Deckers entered the year with momentum. Sales from the UGG brand grew 16% year-over-year in the holiday quarter, with Hoka sales surging 24%. The company is on pace for its fifth straight year of double-digit sales growth.

Since acquiring Hoka in 2012, management has proven it knows how to cultivate and market brands for long-term growth. Hoka is emerging as a top performance running shoe that can compete with major brands. It's generating more than $2 billion in annualized sales, but that still leaves a huge opportunity ahead in the multibillion-dollar footwear market.

There are still opportunities internationally where its brands have relatively low brand awareness. The company said international sales grew 28% year-over-year in fiscal Q3.

While the company will have to navigate the fluid tariff situation and resulting higher costs on imported goods, the stock's lower valuation is already discounting weak sales in the near term that may undervalue its long-term growth.

Analysts still expect Deckers to deliver 15% annualized earnings growth in the coming years. With the stock down 51% from its previous highs, the stock trades at 17 times this year's earnings estimate, which seems like a bargain given Decker's long history of growth and future opportunities.

Should you invest $1,000 in Cava Group right now?

Before you buy stock in Cava Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cava Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $607,048!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $668,193!*

Now, it’s worth noting Stock Advisor’s total average return is 880% — a market-crushing outperformance compared to 161% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

John Ballard has positions in Cava Group. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Deckers Outdoor, and Nike. The Motley Fool recommends Cava Group and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

2 Growth Stocks Down 45% or More to Buy in May was originally published by The Motley Fool

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info