3 Undervalued Gems: Stocks Down 51% to 77% That Could Be Set for a Comeback
7min read The stock market’s volatility in 2025 has left a trail of casualties, particularly in sectors like consumer discretionary and tech, where tariff fears and economic uncertainty have triggered steep declines. Yet, as history shows, sharp drops often uncover hidden opportunities. Today, we’re spotlighting three beaten-down stocks—Shopify, RH, and Roblox—that have fallen between 51% and 77% from their peaks or year-to-date (YTD) highs. Despite their struggles, each boasts resilient fundamentals, growth catalysts, and valuations that may signal a rebound is near.
1. Shopify (SHOP): E-Commerce Resilience Amid a Sector Sell-Off
Shopify, the e-commerce software giant, has seen its shares plummet 51% from their all-time high, driven by broader sector declines and fears of a slowing online retail boom. However, the company’s recent financials tell a different story: 26% revenue growth in 2024, a 61% jump in operating income, and a 37% rise in free cash flow (now at a 22% margin) suggest operational strength.
While its forward P/E of 55 remains elevated compared to legacy retailers, Shopify’s valuation is now the lowest in five years, offering a potential entry point. With e-commerce expected to hit 21% of global retail sales by 2029 (up from 17% in 2024), the company’s pivot to omnichannel retailing—serving both online and physical stores—positions it to capture a growing market.
Why Buy Now?
- Strong free cash flow and margin expansion post-logistics division sale.
- Undervalued relative to its growth trajectory and long-term e-commerce tailwinds.
2. RH (RH): Luxury Retail’s Comeback Play
RH, the luxury furniture retailer, has been one of the hardest-hit stocks in 2025, plummeting 77% from its pandemic-era peak and 62% YTD. The decline stems from tariff pressures—85% of its goods are imported—and a cooling housing market, which dented demand for high-end home goods.
Yet, RH’s balance sheet remains robust: $1 billion in inventory (four months’ sales) and $250–350 million in 2025 free cash flow guidance imply a P/FCF of just 9x, a historic low. Historically, RH has thrived during dips, using buybacks to reward shareholders. Management’s long-term vision of tripling sales to $3 billion by 2027 could be attainable if tariffs ease and consumer confidence rebounds.
Why Buy Now?
- Undervalued on cash flow metrics and a history of aggressive capital returns.
- Potential for a luxury spending rebound as economic fears subside.
3. Roblox (RBLX): The Digital World Holding Up in a Recession
Roblox, the interactive entertainment platform, has dropped 59% from its peak, dragged down by macroeconomic worries and a 4.4% YTD decline. However, its user base continues to surge: 85 million daily active users (DAU) in 2025, up 21% YTD and 44% since late 2022, defy the “recessionary” narrative.
The company’s 29% revenue growth in 2024 underscores its ability to monetize through ads and virtual currency (Robux). Unlike physical retailers, Roblox faces no tariff risks and benefits from a free-to-play model that retains users even during economic downturns. With a $34 billion market cap against $3.6 billion in revenue, the stock offers upside if it meets its 1 billion DAU goal.
Why Buy Now?
- Strong user growth and tariff immunity in a digital-first business model.
- A valuation that reflects pessimism about growth, not fundamentals.
Conclusion: The Case for Contrarian Investing in 2025
These three stocks—Shopify, RH, and Roblox—represent rare opportunities in a market dominated by fear. While tariff risks and economic uncertainty remain, their financial health and strategic moves (e.g., Shopify’s margin improvements, RH’s cash flow, Roblox’s user expansion) suggest they’re better positioned than their prices imply.
For example, Shopify’s 22% free cash flow margin and Roblox’s 44% DAU growth since 2022 highlight organic strength, while RH’s 9x P/FCF multiple offers a margin of safety. Even with the Motley Fool’s cautious stance on Shopify and Amazon, these stocks’ valuations and growth trajectories warrant consideration for investors with a 3–5 year horizon.
As the old adage goes, “The best time to buy is when others are fearful.” In 2025, that fear has pushed these undervalued gems into strikingly attractive ranges.
Final Note: Always consider diversification and risk tolerance before investing. These stocks are speculative and carry sector-specific risks.
