There's no nice way to cover it up. This has been a lousy year for innovation-heavy growth stocks. Cathie Wood's flagship fund, the Ark Innovation ETF is down about 60% since the end of 2021 and many of its components have fallen even further.

Growth stocks have been tanking because it's easier to focus on potential future cash flows and ignore present-day losses when fresh injections of capital are easy to come by. Rising interest rates have been disastrous for growth stock prices but many of the businesses behind those stocks are stronger than ever.

Investor looking for stocks on their devices.

Image source: Getty Images.

This pair of growth stocks have been beaten down hard this year despite operations that are either profitable now or quickly moving in the right direction. Here's how buying some shares of these beaten-down stocks before they recover could do wonders for your portfolio over time.

Doximity

Shares of Doximity (DOCS -1.85%) recently perked up in response to a strong earnings report but the stock is still down 65.2% from the peak it reached last September. The stock is getting hit partly because it flew too close to the sun last year and partly because fear of a recession is pressuring overall spending on digital ads.

Doximity operates a social media platform for doctors, nurse practitioners, and physician assistants. As such, the company relies fairly heavily on ad revenue. Investors will be glad to know the downturn in ad revenue experienced by Meta Platforms isn't carrying over to Doximity's extra-resilient niche. Despite a rough period for digital ad spending, Doximity expects 9% to 11% year-over-year revenue growth over the next couple of quarters.

Doximity also leverages the popularity of its social media platform to market physician productivity tools. Tools for telehealth were used more than 200,000 times per day on average during the three months that ended Sep. 30, 2022.

Cautious investors will appreciate that Doximity is already profitable. The stock has been trading at around 55 times trailing earnings. That's a high multiple, but this company's network effect is an advantage that could allow earnings to explode higher in the years ahead. Tucking some shares into a portfolio now to hold for the long run looks like a smart move.

SoFi Technologies

SoFi Technologies (SOFI -0.62%) was a stock market darling when it began trading publicly in 2021. Unfortunately, it's tumbled 80.3% from the peak it reached last June.

This company got its start about a decade ago by refinancing student loans. This is still a part of its business, but student loans have taken a backseat to auto and personal loans that are far more lucrative.

SoFi's lending business is especially profitable because earlier this year the company obtained a banking charter that allows it to fund loans from a rapidly growing base of consumer deposits. At the end of September, there were 4.7 million members, using 5.9 million financial services products. That was 83% more products than SoFi members were using a year earlier.

Rather than pay a third-party software vendor to manage its customer accounts SoFi bought one. In 2020, it acquired Galileo and its incredibly popular application programming interface (API) for setting up and managing customer accounts. At the end of the third quarter, the Galileo API enabled 124 accounts worldwide, a 40% increase year over year.

SoFi is still reporting minor losses on a GAAP basis, but adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $78 million during the trailing 12-month period ended Sep. 30, 2022. This is a stark improvement compared to an adjusted EBITDA loss of $45 million in 2020. With an increasingly popular consumer bank plus a business-to-business operation that's growing by leaps and bounds, buying this beaten-down stock now and holding it over the long run could do wonders for your portfolio.