2 Beaten Down Growth Stocks I Like Right Now

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Shares of Snowflake (NYSE: SNOW) have fallen more than 30% over the past month despite technically better-than-expected fourth-quarter results from the cloud-based data warehouse-as-a-service provider.

Indeed, Snowflake saw revenue jump 32% year over year to $774.7 million, translating to adjusted net income of $128 million, or $0.35 per share. Most analysts on Wall Street were modeling lower earnings of $0.18 per share on revenue closer to $760 million. Snowflake’s net revenue retention also remained healthy at 131%, while remaining performance obligations (RPO) soared 41% to $5.2 billion.

So what gives? For one, the market was underwhelmed by Snowflake’s guidance for revenue growth in the current quarter of 26% to 27% — slightly below consensus expectations for growth closer to 29%.

It certainly didn’t help that Snowflake’s longtime CEO Frank Slootman also announced his decision to retire, effective immediately.

In my view, however, the market appears to be ignoring Snowflake’s propensity for underpromising and overdelivering on guidance.

Meanwhile, Slootman will remain Snowflake’s Board Chairman, and is being succeeded as CEO by Sridhar Ramaswamy, most recently Snowflake’s Senior VP of AI. Ramaswamy was also a former Google Exec who joined the company last year after Snowflake acquired his AI search startup, Neeva. Either way, the company remains in capable hands.

It wasn’t terribly surprising, of course, to see Snowflake stock pulling back on the news given its rich valuation trading at nearly 19 times TTM sales. But there was nothing in this report to stifle my enthusiasm over Snowflake as a winning business that’s poised to keep on winning. And I think investors would do well to use this pullback as an excuse to open or add to their positions.

Shares of Lululemon (NASDAQ: LULU) have similarly plunged almost 20% over the past week even after the yoga and athletic apparel specialist delivered its own exceptional quarterly update.

Lululemon’s fiscal Q4 revenue grew 16% year over year to $3.21 billion, translating to adjusted earnings of $5.29 per share — both comfortably ahead of consensus estimates.

Underlying its top-line bump was a 9% increase in the Americas, bolstered by incredible 54% growth from international markets.

Forward guidance told a similar story; lululemon called for current-quarter growth to decelerate to a range of 9% to 10%, followed by a slight re-acceleration for the balance of the new fiscal year. During the subsequent conference call, management pointed to a combination of softness in the U.S. and planned spending to bolster brand awareness in the coming quarters.

With the Americas region maturing and only 21% of lululemon’s sales coming form international markets, however, I think investors can look forward to a yearslong runway for outsized growth as this already profitable, cash-rich business capitalizes on its global opportunity.

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