This Growth Stock Just Got Smacked Into the Value Zone By Lucas Downey, Contributing Editor, TradeSmith Daily The biggest trend to be aware of heading into 2025 is that, as falling interest rates take hold, value plays will undoubtedly be on investors’ radar. Where the narrative just a year ago was to shun all but the world’s largest companies, now small caps, REITs, and even Chinese stocks are making a monster comeback. It hasn’t stopped there, either. Prior fallen stars like PayPal (PYPL) are even joining the party. (Disclosure, I own shares of PYPL.) And the good news is there are still plenty of oversold opportunities out there. Today’s signal study will focus on one growth stock that, despite a stellar fundamental score of 83.4 in our Quantum Edge system, is deeply oversold – having fallen an incredible 50% in the last three months. While catching a falling knife is never advised, there are situations when the selling gets so extreme, the upside odds are stacked in your favor. Don’t Let This Blemished Chart Cover Up a Potential Oversold Opportunity If I asked you to tell me a stock that’s lost half its value since July, you’d likely come up short. I wouldn’t blame you. Plenty of areas have been thriving in that time period: from Real Estate and Utilities to, recently, the Energy sector, as well as the equal-weighted S&P 500. Yet this good fortune hasn’t benefited e.l.f. Beauty (ELF) at all. In three short months, ELF has plummeted 50% while the SPDR S&P 500 ETF (SPY) has gained 2.57%: 
If you’re not familiar with e.l.f. Beauty, let me clue you in. It’s a cosmetic and skin care company that’s seen revenues blast off from $392.2 million in 2022 to $1.02 billion in 2024. In that same period, net income ramped from $21.8 million in 2022 to $127.7 million in 2024. In other words, we’re talking about one of the biggest growth stories of the last couple years. When you zoom out on the chart, you understand how powerful the stock has been. Even after the recent 50% decline, shares of ELF are still up a staggering 242% on a three-year basis versus 35% gains for the SPY. The yellow shaded area in the chart below puts the recent share-price collapse in perspective. Using the eyeball test, the stock has now reached levels last seen in November 2023: 
Even more impressive is the current valuation. The steep fall in the share price has knocked the next-12-month price-to-earnings ratio (P/E) to a level not seen in over two years: 25.41. That might sound like a pretty mild, even somewhat cheap valuation. And even better, this has been a great place to buy ELF in the past: Since 2016, a forward P/E below 26 for ELF has occurred 261 times. And what happened next will make you blush: - Three months later, the stock jumped an average of 17.5%.
- Six months later, you’re looking at a 37.6% jump.
- 12 months post this event, shares climbed 68.7%.
- Be bold for 24 months, and the average price jump was a staggering 126.1%.
Look, there are no guarantees in the world of finance. But the data suggests the powder clouds may start parting soon for ELF. This powerful signal study reveals why cutting-edge data is mission critical in this day and age. That’s where TradeSmith can help. There are plenty of opportunities to be found with the right software tools to get your portfolio ready for a big 2025. Regards, Lucas Downey
Contributing Editor, TradeSmith Daily | 
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