While market indexes hover near record highs, quality growth companies are trading at depressed valuations following disappointing quarters or post-IPO selloffs. The market’s laser focus on a handful of mega-cap winners has created opportunities among overlooked names with solid fundamentals and long-term growth trajectories.
These dislocations often create the best entry points. When strong businesses temporarily stumble or fail to meet inflated expectations, the resulting selloffs can push valuations to levels that won’t persist once growth reaccelerates or margins expand. The key is separating temporary setbacks from permanent impairments.
Three growth stocks currently fit this profile—each trading near 52-week lows despite maintaining competitive advantages and expanding addressable markets. Two missed earnings expectations, triggering mechanical selling. One has disappointed investors following a hot IPO earlier this year. All three offer asymmetric risk-reward for investors willing to look past near-term noise.
Figma Inc. (FIG)
Market Cap: $18 billion | Currently trading around $37 | 52-Week Range: $32.83 – $142.92
Figma’s post-IPO journey has been brutal. After opening at $85 on its first trading day July 31st, the collaborative design software company has fallen to around $37—a 56% decline in less than five months. The selloff reflects concerns about valuation rather than business deterioration, creating a potential opportunity for long-term investors.
The concern is understandable. Figma trades at nearly 90 times forward earnings, a multiple that leaves little room for disappointment. For a company still establishing its market position and building operating leverage, this valuation demands near-perfect execution. Any stumble could trigger further selling.
But the business fundamentals tell a different story. Figma’s collaborative design platform has achieved remarkable penetration—95% of Fortune 500 companies use its products. This enterprise adoption reflects genuine product-market fit rather than marketing hype. When the world’s largest companies standardize on your software for design and collaboration workflows, it signals durable competitive advantages.
Revenue growth remains robust, expanding 38% year-over-year in the most recent quarter. Management raised full-year guidance, indicating confidence that growth can sustain despite macro uncertainty. Gross margins of 85.74% demonstrate the economics of software-as-a-service at scale, with incremental revenue flowing mostly to the bottom line as the business matures.
Figma’s competitive positioning in collaborative design creates meaningful switching costs. Once teams build workflows around the platform, share design files across departments, and integrate Figma into their development processes, migrating to competitors becomes disruptive and expensive. These network effects within enterprises provide pricing power and customer retention that should improve unit economics over time.
The forward P/E multiple of 90 won’t appeal to value investors, but growth investors should consider the trajectory. As operating margins expand from current levels—inevitable as revenue scales—that earnings multiple will compress rapidly even without multiple expansion. A company growing revenue 38% while improving margins can grow into seemingly expensive valuations faster than most investors anticipate.
The risk is execution. Figma must continue winning enterprise accounts, expanding within existing customers, and defending against competitors like Adobe who recognize the collaborative design opportunity. Any slowdown in net revenue retention or customer acquisition efficiency could validate the current valuation concerns.
But at $37, down 74% from its 52-week high, the market has priced in significant risk. For investors believing in collaborative software’s secular growth and Figma’s competitive position, current levels offer an entry point that may not persist once the post-IPO selling exhausts itself.
Zoetis Inc. (ZTS)
Market Cap: $54 billion | Currently trading around $123 | 52-Week Range: $115.25 – $177.40 | Dividend Yield: 1.63%
Zoetis has fallen 24% this year after disappointing third-quarter results showed revenue growth of just 1% to $2.4 billion. For a company that built its reputation on consistent high-single-digit growth, this deceleration triggered concerns about whether animal health markets are maturing faster than expected.
The slowdown has legitimate causes. Veterinary clinic visits declined as pet owners faced budget pressures from inflation and rising interest rates. Livestock producers adjusted herd sizes in response to feed costs and commodity price volatility. These cyclical headwinds compressed demand for Zoetis’s medications and vaccines across both companion animal and livestock segments.
But the long-term thesis remains intact. Zoetis has grown faster than the overall animal health market for the past decade, gaining market share through innovation and strategic portfolio management. The company’s focus on bringing new medications to market provides a pipeline of growth drivers independent of market cyclicality.
Net income actually grew 6% to $721 million despite the revenue slowdown, demonstrating operating leverage and margin discipline. Gross margins of 70.29% reflect Zoetis’s pricing power and the value veterinarians place on its products. When animal health is at stake, customers prioritize efficacy over price—a dynamic that supports premium positioning.
The selloff has compressed Zoetis’s forward P/E to 18, below the S&P 500’s average of 22. This valuation disconnect creates opportunity. Animal health spending correlates with GDP growth and pet ownership trends—both long-term positive. As economic conditions normalize and pet owners’ budgets stabilize, veterinary clinic traffic should recover, flowing directly to Zoetis’s revenue growth.
Global expansion provides additional upside. Emerging markets with growing middle classes are increasing pet ownership and improving livestock management practices. Zoetis’s established products and brand recognition position it to capture disproportionate share as these markets mature. The combination of innovation, geographic expansion, and market share gains should drive growth well above the 1% reported last quarter.
The 1.63% dividend yield won’t excite income investors, but it signals management confidence in cash flow generation and provides some return while waiting for growth reacceleration. For investors seeking quality healthcare exposure at reasonable valuations, Zoetis offers a compelling risk-reward profile following the recent selloff.
Pinterest Inc. (PINS)
Market Cap: $18 billion | Currently trading around $26 | 52-Week Range: $23.68 – $40.90
Pinterest fell 11% this year and experienced a sharp drop following its most recent earnings report when adjusted earnings per share of $0.38 missed analyst expectations of $0.42. The market’s reaction was swift and punishing, treating the miss as evidence that Pinterest’s monetization strategy isn’t working.
But the earnings miss obscures stronger underlying trends. Revenue grew 17% to over $1 billion for the quarter, demonstrating that Pinterest continues expanding its advertising business despite challenging digital ad markets. Net income of $92 million represented a healthy 9% margin, showing the company can generate profits while investing in growth.
More importantly, Pinterest’s user base topped 600 million monthly active users and continues growing. This engagement metric matters more than quarterly earnings beats because it reflects the platform’s fundamental health. Users return to Pinterest because it serves a unique purpose—visual discovery and inspiration rather than social networking or entertainment.
This positioning differentiates Pinterest from competitors like Facebook, Instagram, and TikTok. While those platforms focus on social connections or entertainment, Pinterest helps users plan purchases, discover products, and organize ideas. This high-intent user behavior makes Pinterest attractive to advertisers despite having fewer total users than mega-platforms.
The valuation disconnect is striking. Pinterest trades at just 12 times forward earnings with a $18 billion market cap. Compare this to other social media companies commanding significantly higher multiples despite slower growth or smaller user bases. The market appears to be pricing Pinterest as a mature, low-growth platform when the fundamentals suggest otherwise.
Gross margins of 79.99% demonstrate the operating leverage inherent in Pinterest’s business model. As the company improves ad targeting, expands shopping features, and increases advertiser adoption, revenue should grow faster than costs. This margin expansion potential isn’t reflected in current valuations.
The risks center on execution and competition. Pinterest must continue growing its user base, improving engagement metrics, and demonstrating to advertisers that its platform delivers ROI. Competition from e-commerce platforms and other social networks could limit growth if Pinterest fails to maintain its unique positioning.
But at current levels just above its 52-week low, Pinterest offers significant upside if management executes on its monetization strategy. The combination of 17% revenue growth, expanding user base, high gross margins, and a forward P/E of 12 creates an asymmetric opportunity. Either Pinterest successfully monetizes its engaged user base—in which case the stock is significantly undervalued—or growth stalls, limiting downside from already depressed levels.
The Contrarian Opportunity
These three stocks share a common pattern: strong underlying businesses trading at depressed valuations following near-term disappointments. Figma’s post-IPO selloff, Zoetis’s cyclical slowdown, and Pinterest’s earnings miss all created selling pressure disproportionate to the fundamental deterioration.
For patient investors, these dislocations create entry points. The market’s obsession with quarter-to-quarter perfection punishes any deviation from expectations, often ignoring multi-year growth trajectories and competitive positioning. When quality companies stumble temporarily, the resulting selloffs can push valuations to levels that won’t persist once growth normalizes.
The key insight is recognizing which setbacks are temporary versus permanent. Figma’s high valuation reflects real business quality, not hype. Zoetis’s growth slowdown stems from cyclical factors that should reverse. Pinterest’s earnings miss doesn’t change its unique market position or user growth trajectory.
These aren’t distressed companies requiring turnarounds—they’re growth businesses experiencing temporary headwinds while maintaining competitive advantages and expanding addressable markets. For investors with time horizons measured in years rather than quarters, current prices may represent attractive entry points that disappear once near-term concerns fade.
