Plenty of growth stocks fell out of Wall Street's good graces over the past two months as the market got caught in a slump. It's not all that surprising given that concerns about a potential recession are once again elevated. The potential for more interest rate hikes also raises financial risks for companies that can't fund their growth investments through their own cash flow.

But this latest downturn, in most cases, shouldn't threaten the long-term thesis for a growth-focused company with the right fundamentals. That means investors have real potential to secure market-beating returns by picking up shares at a discount.

RH (RH 2.28%) and Roblox (RBLX 1.35%) are two good examples of formerly high-flying stocks that have come down in recent weeks. RH is a luxury home furnishings specialist that might struggle during a pullback in consumer spending. Roblox runs a popular digital-entertainment platform that's exposed to slowing demand for its virtual currency.

Let's look at the two stocks to see which one is worth buying and which is simply worth watching today.

RH is luxurious and worth a closer look

There's no denying that RH (formerly Restoration Hardware) is enduring a growth hangover at the moment. Sales soared through most of the pandemic, but revenue in the most recent quarter fell a painful 20% to $800 million. Management warned investors in early September that these pressures will extend at least through the end of 2023. "We continue to expect the luxury housing market and the broader economy to remain challenging," management explained in a shareholder letter.

Yet this is still a strong business with attractive fundamentals. Operating cash flow improved to $250 million in the first half of the year, compared to $193 million a year earlier. The company raised its 2023 sales outlook slightly this past quarter as it prepares to ramp up advertising around new product launches.

RH is on pace to generate significant profits this year despite the contracting sales footprint. Adjusted operating margin should land between 14.5% of sales and 15.5% in fiscal 2023.

Meanwhile, the stock's price-to-sales valuation has declined to below 2 from roughly 3 a few weeks ago. Growth-stock investors should consider taking advantage of that discount.

Roblox has engagement but isn't a buy candidate at the moment

Roblox stock has become cheaper lately, too, but for better reasons. The good news is the platform is enjoying solid momentum today. Bookings expanded at an over 20% rate in each of the last two quarters. User growth was 25% last quarter, and engagement jumped at the same rate to 14 billion hours.

It's possible that growth could be accelerated by the integration of more generative artificial intelligence (AI) tech. Roblox delivers virtual experiences, after all, and AI is already helping make those experiences more engaging and easier to create.

Still, the big drawback with this stock is the lack of profits. Roblox's operating losses in the first half of 2023 expanded to over $600 million from $300 million. Management has told investors to expect continued losses for the foreseeable future, as well, due to a continued focus on growth initiatives aimed at attracting more creators and users to the platform.

Roblox is cash-flow positive, so management isn't being reckless with its spending plans. But investors might still want to watch this growth stock from the sidelines until there's a clearer path toward positive annual earnings.