Everybody loves a good growth story. The problem is that to get in on the action, investors often have to pay a premium thanks to the hype and tantalizing potential returns for a young company with years of growth ahead of it. Over the past three months, the markets have taken a significant step back, and that's sent shares of Carvana Co. (NYSE:CVNA) and Control4 Corp (NASDAQ:CTRL) 48% and 51% lower, respectively. Here's why these two stocks are amazing growth stories for investors willing to buy when others are fearful.

Focus on the long road ahead

Carvana is a used car retailer with an online car-buying platform that replaces the traditional dealership infrastructure and offers as-soon-as-next-day delivery or pickup at one of the company's automated car vending machines. Let's highlight why Carvana is an amazing growth stock for 2019 by digging into its revenue growth, gross profit expansion, and enticing long-term potential.

Despite Carvana's 48% decline over the past three months, its business has been nothing short of impressive. Consider that during the third quarter, management reported a 116% growth in retail units, 137% growth in total revenue, and a 181% increase in total GAAP gross profit. It marked the 19th consecutive quarter of triple-digit unit and revenue growth, and it's all but certain to make it a 20th consecutive quarter when the book is closed on 2018. Carvana now operates in 85 markets, and it increased its number of market openings from 23 during 2017 to roughly 40 in 2018 -- that expansion can't continue at that pace long term, but expect plenty of new markets in the years ahead.

Carvana has posted excellent top-line growth and will boost that further by entering new markets, but just as important, if not more, is the work it's doing to boost gross profit per unit (GPU). Carvana achieved its highest ever quarterly total GPU in the third quarter, reaching $2,302 per unit. Carvana's GPU is taking steps toward its $3,000 target, and it can increase that in the near term by reducing days to sale and lowering its advertising in maturing markets.

Graphic showing a steady decline in days-to-sale over the past two years.

Image source: Carvana's November Analyst Day presentation.

Remember, as recently as the first quarter of 2018, Carvana's GPU was $1,854, and through reduced days to sale, an increase in retail cars sourced from customers, an increase in wholesale cars sold, and a lower cost of funds on financing and new products and services, among others, management will continue to sell more cars in more markets, more profitably. It's also important to understand that Carvana has tracked declining advertising expenses per unit the longer it operates in a market thanks to word of mouth increasing brand awareness. 

Those figures and examples show that Carvana has plenty of top- and bottom-line growth potential, but how big is its overall growth story? What some investors don't realize is that the automotive industry is highly fragmented. Automotive dealers are the largest consumer retail vertical, with 2017 industry sales topping $1 trillion. Consider how massive the auto dealers industry is compared to the next three largest retail industries: general merchandise stores ($692 billion), grocery stores ($639 billion), and electronic shopping and mail-order houses ($545 billion). But here's the interesting part: The largest company per market share in automotive dealers was CarMax (NYSE: KMX) at 2%. Compare that to Walmart with a 54% share in general merchandise, Kroger with 18% in grocery, and Amazon with 19% in electronic shopping, and you get the sense of how large Carvana could grow if it becomes a dominant retailer and can exploit its growing scale and e-commerce reach.

Carvana investors will certainly face speed bumps within the cyclical automotive industry, but if you focus on the long road ahead, the company has immense potential to grow its market share in a fractured industry while improving the profitability of its retail sales.

A long-term smart-home story

There are few certainties in the world of business and investing, especially when your horizon is decades rather than quarters. However, barring a zombie apocalypse, we can almost certainly say the number of smart and/or connected devices in our life will increase in number, and also in complexity. The exploding number of smart devices in the smart home is great news for Control4, a global leading provider of smart-home solutions and named the leading whole-house automation brand by 2018 CE Pro Brand Analysis.

As smart homes increase in complexity, more and more consumers will turn to professional installations from companies such as Control4, and its dealership network. According to the 2017 True Cost Report from Home Advisor, 40% of millennial homeowners say they'll hire a pro for every project, and 53% of baby boomers said the same. Per the same report, about seven years from now, we should see a bump in increased demand among millennials for professional home services. 

It's certainly positive for Control4 that consumers are expected to increasingly turn to professional installs, but the company needs to focus on a couple of factors to make sure it grows into its massive potential -- management estimates Control4 has penetrated only 1.6% of U.S. households generating over $150,000 in annual income. Those two things are as follows: Keep a healthy balance sheet for acquisitions, and grow brand awareness through showrooms.

Let's cover Control4's brand awareness strategy first. While the company focuses on smart-home solutions, it's yet to become a widely known household name. It hopes to change that in the coming years with its launch of 150 new certified showrooms spanning five countries and 25 markets. The idea is simple: Wow potential consumers with visual demonstrations of world-class, professionally installed smart-home solutions. Control4 is in the early innings of a long-term smart-home growth story, and right now, the company needs to show consumers how much value these systems can add to their lives, homes, and businesses. Not only will showrooms help spread brand awareness and enlighten consumers about the value Control4 systems provide, it should increase sales leads and conversions of those leads.

Interior of a Control4 showroom with wall mounted demonstrations.

Image source: Control4.

Beyond spreading the good gospel of its products, Control4 also has to be nimble in such a rapidly evolving smart-home story. Management needs a balance sheet that's able to pounce on a young business that it can fold into its offerings to improve revenue, add innovative products, or bring in top-level talent.

Graphic showing Control4's six acquisitions since 2014.

Image source: Control4's November Investor Presentation.

Here's the good news: Control4 ended the third quarter with $91 million of cash, no debt and $40 million in unused line of credit. That leaves the company flexible to continue scooping up valuable bolt-on businesses that can help drive brand awareness and revenue, and keep it as a leading provider of innovative smart-home solutions.

Investors considering Control4 and Carvana need to understand that both companies will face speed bumps, similar to the landscape over the past three months, which sent their respective stocks tumbling roughly 50%. Carvana will face pessimism regarding the broader automotive industry as it enters a down cycle, and Control4 could struggle to produce impressive enough top-line growth as it expands its showrooms to grow brand awareness and sales leads. However, if Carvana continues to expand in a highly fragmented market, and Control4 becomes a household name and expands overseas, both are amazing growth stocks heading into 2019 and beyond.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and CarMax. The Motley Fool owns shares of Control4. The Motley Fool has a disclosure policy.