2022 has been a big year for value stocks, many of which are beating the market. Growth investing took a backseat to safer approaches after years of wealth creation while the economy became volatile. But 2023 is on the horizon, and the market could change very quickly. 

As many sky-high valuations on growth stocks bottom out, these stocks could really start up again in the new year. A responsible approach to growth investing, which takes valuation into account along with growth prospects, could help you achieve your investing goals this year.

It's unlikely for any stock to gain five times its value in one year sustainably, but there are those rare stocks out there that appear to be strongly undervalued or have such massive potential that they could really skyrocket. Global-e online (GLBE 5.15%), Revolve Group (RVLV -1.36%), and Portillo's (PTLO 0.66%) are my recommendations for growth stocks that could explode in 2023.

1. The best e-commerce stock you never heard of

Global-e provides cross-border e-commerce solutions for direct-to-consumer retailers. As a customer, you wouldn't interact with the company directly, but you might use some of its services integrated into a client website.

It has an impressive list of partner clients that continues to grow, including names such as Disney, LVMH, and Hugo Boss. Plus, with its recent acquisition of Borderfree, it now has even more marquee clients, like Saks Fifth Avenue and Nordstrom

The company's services add a compelling dimension to a direct-to-consumer growth strategy. It cites many customer success stories: The Native Shoe Company's international conversion rates increased by 87% in one year when it partnered with Global-e, and luggage brand Doughnut increased international orders by 210% in one year. 

It's not surprising that so many companies are signing on, even in the challenging economy. Actually, that might even be more of a reason since retailers facing slowing or declining sales are looking for new ways to invigorate sales rates.

That's why even in the third quarter, it demonstrated robust growth.

Sales increased 79% over last year to $621 million. Gross profit increased 92% over last year, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from $7.7 million to $12.5 million. Net loss, however, widened from $28.5 million to $64.6 million.

A big part of that continued to be the amortization of warrants related to Shopify's investment in Global-e, and as that amortizes and the company continues to scale, profitability should improve.

Global-e stock is down 69% in 2022 and still trades at almost nine times trailing-12-month sales, so it's not cheap. But the potential here is enormous, and as sales increase and profitability improves, this stock could be a standout.

2. The intersection of fashion and technology

Revolve Group is a fashion company that uses artificial intelligence, technology, and social media to sell clothing and related products. It boasts 70,000 apparel items, and it plans to branch out into beauty, shoes, and accessories, expanding its fashion empire.

Millennial and Gen-Z fans are hooked. They continue to buy and increase order value despite inflation, so even though Revolve's growth is decelerating in this environment, it's well positioned to maintain its momentum and return to higher growth in better times.

This is a founder-led company, and its co-CEOs are highly focused on operational excellence and differentiation. They went for a new concept when they created Revolve almost 20 years ago, and traditional fashion retailers are now trying to catch up. 

Revolve's sales increased 10% year over year in the third quarter, and net income decreased by 28%. Revolve's high-fashion site, FWRD, targets a more affluent customer and continues to outperform the rest of the company, posting a 17% sales increase. And the company generated $9 million in free cash flow, a triple-digit increase over last year.

Because the company is completely online, it doesn't have to pay for costly store space or hold tons of inventory.

It was able to rebalance inventory levels when demand began to decrease in the second quarter, and other companies were left with overflow. That's allowed it to stay profitable and cash-flow positive despite slowing demand. And since it relies on artificial intelligence for critical and current data, it was able to do that while still offering customers the merchandise they were looking for, keeping the sales flow steady. These are qualities that make it a retail superstar.

Revolve stock is down 55% this year and trades at a price-to-earnings ratio of 24. It's cheap, and it has tons of potential in 2023 and beyond.

3. Getting a better burger

Portillo's is a small fast-casual burger chain that says it offers "unrivaled Chicago street food." It's been around as an iconic Chicago emblem since 1963, but it opened its first store outside of Illinois in 2005, with plans for real expansion in 2015. It went public last year, and its stock has been down 49% since then.

The restaurant chain now operates 71 stores, which is tiny compared to chains that offer similar fare, like Chipotle Mexican Grill (almost 3,100) and Shake Shack (402).

It's demonstrating robust growth, with a 10% year-over-year sales increase in the third quarter, including a 6% comparable sales increase. Even better, it's profitable, although net income decreased from $6.5 million last year to $3.2 million this year. Profitability is likely to be variable as the company scales, but posting positive net income at this stage is a great signal of healthy growth.

Out of the stocks on this list, Portillo's seems to have the most unknowns since it's so new and so small, making it somewhat risky. But it's quite cheap, trading at 1.5 times trailing-12-month sales, and it has serious potential to expand.

Considering its valuation, size, and popularity, Portillo's looks like it could be a huge asset to a growth-oriented portfolio, in 2023 and for many years.