Fear has gripped the market and crushed valuations for growth stocks over the last year, and the growth-heavy Nasdaq Composite's level has fallen a staggering 35% across the stretch. But as world-renowned investor and Berkshire Hathaway CEO Warren Buffett famously said: It pays to be greedy when others are fearful.

Buffett's willingness to take contrarian positions in the face of bearish pressures has helped make Berkshire Hathaway one of the most successful holding companies in history -- and delivered life-changing returns for the company's long-term shareholders. With that in mind, read on to see why investing in these two beaten-down Berkshire stock portfolio components could be a path to incredible wins for investors.

Warren Buffett in a crowd smiling.

Image source: The Motley Fool.

1. Snowflake

When mapping out strategies or running software in real time, the ability to gather, analyze, and act on cloud-based data is at the heart of modern operational success.

These days, the vast majority of businesses and institutions rely on cloud infrastructure from multiple providers. But it's impossible to natively store and combine data generated through Amazon, Microsoft, and Alphabet's respective cloud services. If organizations can't efficiently make use of the combined information generated from multi-cloud setups, they're not getting a full analytics picture. Snowflake's (SNOW -5.26%) Data Cloud platform for data warehousing and analytics solves this problem, and it's been helping the company post fantastic sales growth.

Snowflake ended the third quarter with 287 customers generating at least $1 million in annual product revenue each year, up from 148 at the end of last year's third quarter. The company also posted net revenue retention of 165% in the period, meaning existing customers increased their spending by 65% compared to the prior-year quarter. Spurred by these catalysts, the data-services specialist's product jumped 67% year over year to reach $522.8 million in Q3, and the company recorded an encouraging non-generally accepted accounting principles (adjusted) gross margin of 75% in the period.

Snowflake also has a strong balance sheet to work with, ending last quarter with cash and equivalents totaling roughly $3.9 billion net of debt. This strong financial footing puts the company in a good position to continue pursuing internal growth initiatives and opens the door for potential acquisitions if management identifies worthwhile opportunities.

Snowflake stock is a great opportunity for growth-focused investors at current prices, down approximately 59% over the last year and 65.5% from its high.

2. StoneCo

StoneCo (STNE -3.02%) is a leading provider of payment processing services in Brazil, but based on its recent stock performance, you would hardly guess the company is a category leader.

The Brazilian fintech company's share price has fallen 52.5% over the last year and plummeted roughly 90% from its peak in 2021.

A combination of macroeconomic headwinds and regulatory changes crushed the credit side of StoneCo's business, leaving it with a lot of bad debt. While the company has since discharged much of its troubled credit extensions, it still carries roughly 472.7 million Brazilian reals (or roughly $91 million) in bad debt on the books. It's a casualty that will continue eating into the company's balance sheet or earnings.

STNE Market Cap Chart

STNE Market Cap data by YCharts. PE ratio = price-to-earnings ratio. PS ratio = price-to-sales ratio.

With a market cap of roughly $2.9 billion, the company's bad debt looks significant, but it's not a setback that's likely to sink the company -- particularly when the core payment processing business has continued to grow at a healthy clip. Strong performance for the payments business helped push overall revenue up 71% year over year in the third quarter. And the stock has room for explosive upside, trading at roughly 29 times expected earnings and 1.6 times expected sales for the 2022 fiscal year.

As a company, StoneCo is certainly facing some challenges it will have to overcome on the near horizon. But as a stock, it offers an attractive risk-reward profile for investors willing to weather near-term volatility in pursuit of potentially explosive gains.