2 Growth Stocks That Could Surge in the Second Half of 2024 and Beyond

Lululemon Athletics (LULU -1.72%) And Celsius holdings (CELH -2.75%) are two consumer brands that have become extremely popular in recent years. Both stocks have risen significantly in recent years, although both have seen major sell-offs this year.

Let’s take a look at why these stocks have fallen so much in value and why they could both be poised for a major recovery in the second half of this year and beyond.

1. Celsius Holdings

Energy drink maker Celsius has been a hot commodity for the past five years, until around the end of May. Now, the beverage stock has suddenly seen its share price nearly halved from its all-time high.

The company’s success has been driven by carving out an attractive niche in the energy drink market by appealing to customers with a less aggressive aesthetic: differentiated flavors like Peach Vibe, sugar-free options in a high-sugar category, slimmer cans, and a more understated marketing message. A distribution deal with PepsiCo By 2022, the company had achieved broad distribution among retailers, particularly in the important convenience store channel.

However, after three straight years of 100% or more revenue growth, that growth has unsurprisingly begun to slow. The company is now essentially fully distributed in the U.S. The 37% revenue growth in the first quarter was strong, but ultimately a huge slowdown from the 95% revenue growth it had in the fourth quarter. Meanwhile, Nielsen data in tracked channels has shown growth continuing to slow week over week, down to 13% in the last week of June, though the comparison was affected by the timing of the July 4 holiday.

Despite slowing growth in tracked channels, Celsius still has a number of opportunities ahead of it that could help the stock recover this year and beyond. International growth remains a big opportunity for the company. It’s just scratching the surface of service in terms of penetration, having just entered the UK and Australian markets. It also has an opportunity to increase the number of items per store, better position the cooler, and grow in untracked channels.

Trading at less than 35 times 2025 earnings estimates and with a price-to-earnings growth (PEG) ratio of 1 times, the stock appears attractively valued for a growth stock with some good opportunities ahead of it. If the company can expand internationally and carve out a similar niche as it has in the U.S., the stock should perform well over the long term.

CELH PE ratio (forward 1 year) data from YCharts.

2. Lululemon Athletics

Shares of Lululemon have had a rough year, down more than 40% year to date. Investors are nervous about increased competition from new entrants like Alo and Vuori, and potential fashion changes. Cautious comments about the U.S. consumer in March when it reported its fiscal fourth-quarter results, combined with the departure of its chief product officer in May, only added fuel to the fire.

Last quarter, the company saw comparable-store sales in the U.S. remain flat, but a 29% increase in international comparable-store sales resulted in a 7% increase in overall comparable-store sales and a 10% increase in overall revenue.

International remains one of Lululemon’s biggest opportunities moving forward, and so far the brand appears to be resonating with international customers. However, the company also has an opportunity to reignite growth in its North American markets through product innovation and category expansion.

The brand looks set to remain strong and the potential of an improved US consumer and a strong back-to-school season could also bode well for growth. Early indications are that the back-to-school shopping season is off to a good start, with Adobe Analysts note that Amazon saw Prime Day sales for kids’ apparel jump 165%, while other back-to-school items like backpacks and school supplies rose 216%. Other data points from the National Federation of Retailers, including container shipping volumes in May and strong retail sales in June, also point to a strengthening retail environment.

With a forward price-to-earnings (P/E) ratio of less than 18 based on 2025 estimates, Lululemon is trading at one of the lowest valuations in history.

LULU PE ratio (forward 1 year) data from YCharts.

Given its valuation, the opportunities it offers and the potential for a strong start to the school year, apparel stock could see a strong recovery in the second half of this year and beyond.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Amazon, Celsius, and Lululemon Athletica. The Motley Fool has a disclosure policy.