1 Growth Stock Down 34% to Buy Right Now

Government shutdown or not, the S&P 500 keeps climbing. That feels great to bulls, but it should definitely make you think twice about which stocks you're investing in today.

There are bargains in any market, but when it keeps soaring no matter what negative news is happening around you, you may want to pull back from high-octane growth stocks and start searching for deals.

On Holding (NYSE: ONON) is a rising athleisure powerhouse that's challenging the top companies in the industry, but its stock is 34% off its highs. Here's why you should consider adding it to your portfolio.

A runner in a pair of On shoes. Image source: On Holding.

On the rise

On is known for the distinctive soles on its activewear shoes that have holes running along the sides. These are meant to offer excellent comfort, and its signature shoe is the On Cloud sneaker. Most of its shoes have some cloud-based moniker, like Cloudsurfer and Cloudmonster.

These shoes have caught on with an affluent clientele that's demonstrating loyalty, and as its fan base grows and purchases its premium-priced wares, On has been reporting outstanding growth.

In the 2025 second quarter, revenue increased 38% year over year (currency neutral). But it's not just the shoes. The company is building its brand, and its ancillary products are picking up steam and becoming more important parts of the business. Footwear sales increased 36%, clothing was up 76%, and accessories increased 143%.

On is developing an omnichannel global business, and direct-to-consumer sales rose 54% over last year in the quarter. That indicates its brand is resonating with customers, who are seeking out its exclusive buying channels. But it has a strong presence in wholesale channels as well, making it available to new customers.

Gross margin expanded from 59.9% last year to 61.5% in the quarter, but operating expenses are still high since the company is constantly entering new regions, and that comes with high marketing and administration costs. It's still in growth mode, but profitability is starting to catch up, although net income was negative in the second quarter.

On the mend

Although the stock initially jumped on what was a mostly phenomenal quarter, including a raise from management on full-year guidance, the share price has been falling since then on fears about tariffs and continued global inflation. On produces most of its products in Southeast Asia, and tariffs on merchandise made in Vietnam and Indoneisa have increased from 20% to 40% and 39% respectively. Increased tariffs could also weigh on its already struggling profitability, and as inflation persists, it could affect even On's upscale and resilient target clientele. It's already affecting most of its competition.

Management is upbeat despite the increasing tariffs. CEO Martin Hoffmann said that it's raising guidance even on profitability because, as it scales up with its high prices, generating higher sales, it can absorb more costs and still come out ahead.

The market is also weighing its decelerating sales growth. Although it's beating guidance, it's still growing more slowly as it gets bigger, and slowing growth isn't going to get the same premium valuation for the stock price.

On your buy list

At the current price, On stock trades at a forward one-year price-to-earnings ratio of 26 and a price-to-sales ratio of 4.4. The company is just getting started, and it's demonstrating strong momentum where it already has a foothold. This looks like an attractive entry point to what could be a huge growth story.

It looks undeservedly oversold at this price, and the average Wall Street target price on the stock is a 64% gain over the next 12 to 18 months, with a high of 90%. Investors looking for a bargain growth stock should take a closer look at On shares.

Jennifer Saibil has positions in On Holding. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.