3 Promising Growth Stocks That Are Down Around 60% From Their Highs

It can take a while for growth stocks to reach their full potential, which is why they can make for good long-term options to hang on to. Along the way, however, they can encounter difficulties that send their valuations down. But those declines in value could prove to be temporary, and that's why buying solid growth stocks when they are down can be a great move in the long run.

Three stocks that look to have solid growth prospects but are trading down significantly from their highs are: Viking Therapeutics (NASDAQ: VKTX), Cava Group (NYSE: CAVA), and Figma (NYSE: FIG). Here's why these stocks could be worth buying today.

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1. Viking Therapeutics

Entering trading this week, Viking Therapeutics' stock was down nearly 57% from its 52-week high of $81.73. This once-exciting growth stock looked like it may be the next big player in the GLP-1 weight loss drug market. But then, investors grew concerned that the oral version of VK2735, its leading drug, had a high discontinuation rate in a recent clinical trial. The stock would end up plummeting on the news.

However, I'm not overly concerned about that because the drug remains in development; Viking hasn't scrapped it over safety issues. Investors also shouldn't forget that the company has an injectable version of VK2735 that's further ahead and is in late-stage trials. If it obtains approval, that alone could be a huge growth catalyst for the business, which today generates no revenue.

Viking is a risky stock to own because it doesn't have any approved products in its portfolio just yet. But with a lot of progress thus far and VK2735 showing that it is an effective treatment in helping people lose up to 14.7% of their body weight after just 13 weeks, this is a pharma stock that growth investors shouldn't overlook, as Viking's upside could be massive.

2. Cava Group

Share prices of Mediterranean-cuisine-focused fast-casual restaurant chain Cava Group are down more than 46% this year, and they are down nearly 65% from their 52-week highs of $172.43. The company's business looked resilient not too long ago, but then its growth rate began to buckle.

Same-store sales were up just 2.1% in the company's most recent quarter, which went up until July 13. That's a far cry from a year ago, when the comparable growth was 14.4%. However, with economic conditions weighing on countries all over the world, many restaurants have experienced challenges of late. Cava's positive same-store growth is nonetheless still encouraging. The company opened its 400th restaurant recently and it still has plenty more growth left as it plans to reach 1,000 locations by 2032.

The restaurant stock trades at more than 50 times its trailing earnings, but for long-term investors, this can be a good time to buy in at a reduced price, as this growth machine is still ramping up to get far bigger in the long run.

3. Figma

It's only been a few months since Figma went public. The software company, known for its easy-to-use and collaborative design programs, started out hot in the summer, but then its valuation proceeded to fall. It entered this week trading at around $53, which is nowhere near the high of $142.92 that it reached on Aug. 1.

At $26 billion in market cap, it's trading only slightly higher than what tech giant Adobe was willing to pay for it back in 2022 when it bid $20 billion for the business (it ultimately fell through due to anti-trust concerns). Figma reported $249.6 million in revenue for the period ending June 30, which was 41% higher than in the prior-year period, as this also looks like a tremendous growth machine to invest in.

This fast-growing tech business was such a big concern for Adobe that it was willing to pay $20 billion to take it over. And today, more than three years later, investors can get it for a comparable valuation. That sounds like a steal of a deal to me.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe. The Motley Fool recommends Cava Group and Viking Therapeutics. The Motley Fool has a disclosure policy.