Down 50% and Still Standing: 3 Growth Stocks Worth Your Attention Now

There are several growth stocks in the consumer space that have been cut in half and now look like attractive buys. While consumer stocks can be impacted by the economy and consumer spending, if investors can tune out the near-term noise, they can often find some gems.

Here are three growth stocks down around 50% to start adding to your portfolio for the long haul.

1. E.l.f. Beauty: Still a beauty queen

E.l.f. Beauty (NYSE: ELF) stock has been volatile over the past year, hurt by tariffs, but its growth story remains intact. The company has done a fabulous job over the past few years, driving sales and taking market share with its namesake brand in the mass cosmetics space.

Its introduction of cheaper products similar to popular prestige brand offerings and influencer marketing has resonated with younger demographics. This helped the company increase distribution into new retail outlets and expand its shelf space.

Now the company has a big growth opportunity following its acquisition of celebrity Hailey Bieber's Rhode brand.

Bieber, who will stay on as Rhode's chief creative officer, helped build Rhode into an upscale skincare brand with sales over $200 million, with just a handful of products sold on its website. E.l.f. will now have the ability to plug the brand into its influencer marketing machine, expand its product portfolio, and increase its distribution. That should lead to strong growth in the coming years, and is the main reason investors should jump on the stock as it's more than 50% off its highs.

2. DraftKings: A bet worth making

DraftKings (NASDAQ: DKNG) stock has been roiled by the rise of prediction markets, which essentially offer futures contracts that function as sports bets without state oversight. Instead of just pouting about this somewhat legally questionable new competition, DraftKings has decided to join them with its own prediction offering.

However, the fights over sports betting on these prediction markets are far from over, as it bypasses important state tax revenue, and there is a bipartisan bill that would bar prediction markets from offering contracts that act as sports bets. That would be huge win for DraftKings if it were signed into law.

As the company waits, though, it has recently introduced a super app that brings together its sportsbook, online gaming, lottery, and prediction market offerings. Notably, the app will only display what offerings are legal in the state a user is currently in.

While revenue growth is expected to slow to 11% this year as it navigates the predictions market threat, DraftKings still predicts it will reach 30% EBITDA margins by 2030 (up from 10% last year), which would represent huge profitability growth in the coming years.

Between DraftKings' margin expansion opportunities and the potential for sports contracts to be barred on prediction sites, it's worth betting on DraftKings with the stock down nearly 50%.

3. RH: Looking to be the dominant global player in luxury furniture

One of the hardest hit industries the past few years has been the home furnishings and furniture industry. There was a big pull forward in demand during the COVID-19 pandemic as people spent more time at home, while tariffs have hit the industry particularly hard.

Despite that, RH (NYSE: RH), formerly known as Restoration Hardware, was able to grow its revenue and EBITDA as it embarks on an aggressive expansion strategy, both in the U.S. and in international markets. Importantly, it also turned free cash flow positive last year despite building out new, expensive showrooms.

The company is working to position itself as a luxury home brand on par with luxury fashion brands. This year, it is introducing a major new brand extension, called RH Estates, to tackle the traditional furniture preferences of many luxury home owners. It made several small acquisitions to help create bespoke, custom-made collections to launch this new effort.

This should also help with its European expansion, where these styles are more prevalent with upscale customers. RH predicts that RH Estates will become its biggest growth and highest-margin business in the coming years.

While the furniture industry is in a rough spot, now could be a great time to buy RH stock as it works to become a global luxury furniture leader.

Geoffrey Seiler has positions in e.l.f. Beauty. The Motley Fool has positions in and recommends e.l.f. Beauty. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.