This year has been a trying time for growth investors, as a wide swath of growth stocks has taken a sharp tumble. The Nasdaq Composite Index is down nearly 28% year to date, plunging the bellwether technology stock index into its second bear market since 2020. While the Federal Reserve's recent interest rate hike of 0.5% -- the sharpest increase in the last 22 years -- was the immediate trigger, the four-decade high inflation and the monthslong global supply-chain issues have been the real culprits behind the slowing economy. 

Specifically, many stocks fared much worse than the index as investors took a risk-averse approach -- sell first and ask questions later. However, I believe throwing the baby out with the bathwater is not the correct approach. Some businesses have been unfairly penalized by the market for reporting slower growth rates even as the pandemic eases. Others have seen valuations plummet as investors eschew high-growth stocks in favor of stalwarts and dividend-paying ones.

Such pessimism may create attractive bargains for investors who are willing to look past the stock declines to get to the heart of the business. Here are three stocks that performed worse than the market but could constitute an opportunity for you to load up on for long-term capital appreciation.

Group of people jogging.

Image source: Getty images.

1. Netflix

Netflix (NFLX -1.51%) used to stand tall as the leader of the streaming television giants that could do no wrong. However, its share price has fallen close to 70% year to date. This year's first quarter saw the company suffer its first quarter-over-quarter subscriber decline in a decade, with paid memberships falling by 200,000 to 221.64 million. Despite reporting a 9.8% year-over-year growth in revenue, investors were disappointed as Netflix guided for an even sharper 2 million subscriber loss in the next quarter.

These numbers have undoubtedly put pressure on its stock price, but the company is not taking things lying down. CEO Reed Hastings has acknowledged that Netflix faces a password-sharing problem, where up to 100 million households are accessing services that they did not pay for. The company's solution to this is to clamp down on the practice and introduce tiered plans that feature advertisements. Not only will this create a new source of revenue for Netflix, but it also allows for the rollout of cheaper plans that could entice those sharing passwords to sign up for an account.

Meanwhile, Netflix continues to focus on improving its capabilities with the acquisition of Next Games, a Finnish mobile game developer, for around €65 million. The company has been investing in building up its gaming division to increase its revenue streams, and this tuck-in acquisition should help boost its portfolio of games.

2. Nike

Nike (NKE -0.20%) is the sports footwear and apparel leader. The company is well known for its innovative footwear worn by world-class athletes, and has also successfully pivoted its sales toward its online stores via its Nike app. Its recent earnings report demonstrated the company's ability to continue growing amid the pandemic -- revenue for the first nine months of fiscal 2022 ended Feb. 28 was up 7% year over year, while net income rose 9% year over year to $4.6 billion.

Investors, however, were concerned with Nike's prospects in the face of lockdowns in China as COVID-19 makes a resurgence in the country. With Shanghai under lockdown for March and April, retail sales and consumer sentiment were severely impacted. A quick check of Nike's recent third-quarter earnings shows that Greater China made up close to 20% of the company's revenue and generates around 45% of operating profit. This fact, along with the worsening supply chain situation that is hampering transit times to market, has resulted in pessimism over Nike's earnings in the next few quarters. Because of these troubles, the market has pushed Nike's share price down nearly 35% year to date.

However, these issues are short-term in nature and should sort themselves out eventually. Investors can take advantage of the share price weakness to gain exposure to a digitally ready, innovative sports equipment company at attractive valuations.

3. PayPal

PayPal (PYPL -0.86%), a leading payments portal, has been a strong beneficiary of surging online transactions caused by the pandemic. Total payment volume (TPV) for 2021 hit $1.25 trillion, up 33% year over year, with 49 million net new accounts added and $5.4 billion of free cash flow generated. But with economies recovering from the pandemic and borders reopening, PayPal's growth should moderate going forward. This expectation, coupled with rising interest rates, caused PayPal's stock to plunge nearly 60% year to date.

The company reported a decent set of earnings for its fiscal 2022 first quarter. TPV rose 13% year over year, while net revenues increased 7%, with 2.4 million net active accounts added during the quarter. PayPal also reiterated its forecast for full-year TPV growth of around 13% to 15%, with net revenue guided to climb 11% to 13%. However, the company projected just 10 million new accounts for this year, significantly below the 49 million added last year.

Investors need to accept that PayPal is now reverting to its pre-pandemic growth rate and shed their disappointment. The last two years have helped provide PayPal's business with a big boost, but these tailwinds have mostly dissipated by now.

Still, the company has demonstrated its ability to grow by introducing new products and services and ensuring that customers stay loyal. For example, it recently launched a new cash-back credit card, which gives 3% cashback unlimited times when paying with PayPal. PayPal's growth may not be as impressive as it's been in the last two years, but it still commands a strong position in the payments space and continues to grow steadily.