1 Growth Stock Down 54% to Buy Right Now

Temperatures are heating up. Celsius Holdings (NASDAQ: CELH) is cooling down. Shares of the sparkling sports drink company have plummeted 54% since hitting an all-time high of $99.62 in March. It's a stark reversal in fortune for the once high-flying stock that was breathing new life into the functional beverage market with its scintillating top-line growth.

Celsius stock is still roughly where it was a year ago, more than doubling over the last three years. It's also a wealth-altering 25-bagger for anyone who owned it through the last five years. The starting lines are irrelevant beyond the taxable cost basis, though. Losing more than half of your money in four months in an otherwise bubbly market is enough to turn any stomach.

And it's not just stomachs that are turning. Tailwinds have turned to headwinds. Bulls have turned to bears. Let's take a closer look at how things fell apart for the Celsius story, but also why now could be a good time to approach the discarded beverage stock from a contrarian perspective.

Putting the "sell" in Celsius

The most common reason given for the dramatic slide in Celsius stock is the equally dramatic slide in its once jaw-dropping revenue growth. Annual sales have more than doubled for Celsius in the last three years. This year has been a different story. Revenue went from soaring 95% in the fourth quarter of last year to a mere human 37% year-over-year jump in the first quarter of this year. This would seem to be the obvious culprit, but it's an incomplete picture.

The shares did inch lower on May 7 after the company posted its first-quarter results, but the pessimism didn't last. Revenue may have fallen short of Wall Street pro targets, but the rare miss was explained away as inventory adjustments by distributor and minority shareholder PepsiCo . On the other end of the income statement, Celsius actually came through with another double-digit percentage beat.

Data source: Yahoo! Finance. EPS = earnings per share.

Two weeks after the initially poorly received report, Celsius stock was less than a dollar away from hitting another all-time high. In short, the stock has been cut in half since well after its last financial update.

One can turn to blaming the growing overall negative sentiment for the massive drop over the last two months, but that's not fair either. More than 16% of the outstanding shares were being sold short in March when the shares were peaking. The bearish wagers on the stock have fallen to less than 9% of the share count. A short squeeze should've sent the stock higher, not lower.

The swoon over the last two months draws us closer to the real problem here. Reports began to surface in late May of third-party retail channel checks showing a slowdown in Celsius sales. Rising temperatures could be doing more damage to your Celsius stock than your A/C bill. Even PepsiCo has recently noted that many people are coping with this hot summer by replacing sparkling beverages with more conventional hydration options. This could be just the tip of the watery iceberg, but since then several analysts have been slashing their price targets on Celsius stock.

Image source: Getty Images.

Finding liquidity in the liquid

There's no denying that the last couple of months have been brutal if you're a Celsius shareholder -- like me. Optimism may not seem fashionable, but let's size up the opportunity here. The stock has been cut in half over just the last two months, but the same can't be said about its fundamentals. In the last 60 days analysts have gone from expecting $1.09 in earnings per share this year to $1.07. Looking out to next year, analyst estimates have fallen from $1.45 per share to $1.38 per share. The numbers are going in the wrong direction, but it's not as if profit expectations have mirrored the stock's decline.

Celsius -- which analysts feel can continue to grow revenue at a 25% clip for the next couple of years -- is trading at a reasonable 33 times earnings. The second quarter that it will report early next month may potentially be painful, but what if that's already been more than discounted by now? How silly will today's sellers be if sales start to pick back up again as temperatures start to come down? What happens once we lap the PepsiCo inventory adjustments?

If one can argue that Celsius stock was priced for perfection in the springtime, the argument can be even louder that the shares are priced for imperfection now. A whiff of bad news sent the stock reeling. What happens at the first whiff of a positive development? Celsius may be out of favor as an investment, but its product isn't exactly out of favor. There's no point in trying to nail the bottom in any cascading stock, but there seems to be more upside than downside for investors at today's price point.

Rick Munarriz has positions in Celsius. The Motley Fool has positions in and recommends Celsius. The Motley Fool has a disclosure policy .