Stocks To Buy

Second Chance Investments: 3 Top Stocks on Sale Now

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The stock market is filled with many opportunities, but some promising picks lose value in the short run. Some of these dips only last a few days, while others can extend for several months. When great stocks go on sale, investors can accumulate more shares with the same amount of capital.

These bargain deals don’t last forever, as investors soon remember the long-term growth prospects of stocks on the discount rack. These discounted stocks have outperformed the market but are offering investors a second chance due to recent pullbacks.

Meta Platforms (META)

Meta Platforms (NASDAQ:META) has become the most undervalued stock among the Magnificent Seven cohort. Shares dropped 10% on a good earnings report. Some investors wanted more, but the company delivered good earnings and only trades at a 25.9 P/E ratio.

Revenue increased by 27% year-over-year (YoY), while net income surged by 117% YoY. Daily active users grew 7% YoY to reach 3.24 billion users among its platforms. Meta Platforms also stands to benefit if the TikTok ban goes through.

The deadline is January 19, 2025, one day before the next presidential inauguration. ByteDance stated it will not sell TikTok. The app reached 150 million American users in March 2023. It’s very safe to assume the number has soared since then. These users will have to use other social networks to fill in the time if the January 19th ban passes. Meta Platforms stands to benefit. The company has gained 26% year-to-date.

E.l.f. Beauty (ELF)

E.l.f. Beauty (NYSE:ELF) has been a top-performing stock. It’s gained more than 1,150% over the past five years and has a decent 13% year-to-date gain. However, the stock is in the middle of a correction heading into its next earnings report. Investors were spooked over a warning from Ulta Beauty (NASDAQ:ULTA) about softening demand for its beauty products.

E.l.f. Beauty has been growing at a faster rate than Ulta. The smaller firm has also been gaining more market share. ELF delivered 85% YoY net sales growth and gained 305 basis points of market share in Q3 FY24.

The latest earnings report extended e.l.f. Beauty’s streak to 20 consecutive quarters of growth. Net income jumped by 41% YoY, and the company significantly raised its fiscal 2024 guidance for net sales, net income and other metrics. The future looks bright for the beauty firm, and the recent pullback offers an opportunity for patient investors.

Deckers Outdoor (DECK)

Deckers Outdoor (NYSE:DECK) generated a lot of buzz about its add to the S&P 500. The athletic apparel giant is up 25% year-to-date and has soared by 431% over the past five years. Despite the long-term gains, Deckers Outdoor is in the middle of a correction. Shares are down by more than 12% from their all-time high.

The company has several popular brands under its corporate umbrella, such as UGG and HOKA. Those two brands helped Deckers Outdoor deliver 16% YoY net sales growth in Q3 FY24. Diluted EPS jumped by 44% YoY as the corporation improved its profit margins. The HOKA brand stood out with 21.9% YoY revenue growth.

Deckers Outdoor is still growing, while larger competitors like Nike (NYSE:NKE) are faltering. That setup gives Deckers Outdoor a good opportunity to gain market share. The company is also growing with a sustainable business model based on its 25.0% net profit margin.

On this date of publication, Marc Guberti held long positions in ELF and DECK. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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