Growth stocks aren't delivering close to the mouthwatering returns they were for investors a few years ago, but that doesn't mean that the best days for these kinds of companies are in the past. On the contrary, for companies with a strong competitive advantage in their respective industry, a quality underlying business, and a distinct path forward to achieve future growth, a depressed share price shouldn't keep investors at bay. 

If anything, the discounts afflicting growth stocks at the moment may present a once-in-a-decade opportunity to buy more wonderful companies at bargain basement prices. Upstart (UPST 2.71%) and Lululemon (LULU -2.59%) are two such companies to consider adding to your portfolio before 2023 gets started.

1. Upstart

Upstart started off 2022 on a high. In the first quarter of 2022, revenue jumped by 156% and its net income by 224% from the year-ago period to $310 million and $33 million, respectively. This followed a strong year of performance in 2021, in which revenue ($849 million) and net income ($135 million) surged 264% and 2,150%, respectively, compared to 2020.  

Upstart's AI-based model -- which leverages both traditional and non-traditional factors to assess consumer creditworthiness -- has vastly expanded the number of reliable applicants that can apply for and receive loans. Over the long term, this model doesn't just help consumers but also the financial institutions that underwrite and make money off their loans. 

For Upstart, which primarily acts as the middleman, this means it can collect more fees from interest, the loans underwritten by its partners, and the loans it carries, which can translate to more revenue and profits for the company. Over the long term, as interest rates become less prohibitive for consumers and the macro environment relaxes, Upstart's core business model is well poised to capitalize on this trajectory. 

Upstart is still growing its network of financial institution partners, even as loan volumes are down, and it's making significant headway with business lines like auto lending and small business loans. Beyond its AI and machine-learning-powered platform, which is constantly fine-tuning to the macro factors of the moment, Upstart has another trick up its sleeve that could help it adjust accurately for risk and promote a more momentous recovery in the future. In the most recent earnings call, CEO Dave Girouard shed light on an up-and-coming product called the Upstart Macro Index:

This index is a monthly indication of the state of the economy, specifically with regard to consumer financial health and credit performance. At the simplest level, UMI is designed to estimate the level of default to expect in a time period, holding underwriting models and borrowers constant ... We believe this is the first time that commonly understood and broadly forecasted economic indicators can predict credit performance and are looking forward to sharing more with you as we refine this tool. Our goal is to be the fastest platform to respond to macro changes and to provide the most relevant and up-to-date information to our lenders, and UMI is a big step in that direction.  

Declining loan volumes were inevitable in a high-interest-rate landscape where institutional investors, who fund the lion's share of Upstart's loans, are far less inclined to put their capital forward than in times past. While this has resulted in revenue declines for Upstart and a foray back into net losses in the near term, this doesn't detract from the promise of the company's long-term growth story, which is just getting started. 

2. Lululemon

Lululemon continues to buck the trends afflicting the broader retail space, reporting strong and consistent growth on both the top and bottom lines. Even as consumer spending remains in flux, people are still spending money on athleisure products, a popular segment of the retail industry that is expected to hit a valuation of more than $842 billion by 2028.  

The most recent quarter saw Lululemon's net revenue jump 28% year over year to $1.9 billion, while total comparable sales rose 22% from the year-ago period. Taking out the impact of foreign currency fluctuations, these two metrics saw respective year-over-year growth rates of 31% and 25%.  

Lululemon continues to bolster its presence both domestically and internationally. Its net revenue jumped 26% year over year in North America in the third quarter, while its international net revenues surged by an eye-popping 41%. Meanwhile, the company's operating margin expanded by 120 basis points on a year-over-year clip, and its net income -- which totaled $255 million for the three-month period -- represented a 36% increase compared to the same quarter in 2021.  

The retail stock is well on its way to achieving its Power of Three x2 growth strategy, which includes a plan to double its 2021 revenue of $6.25 billion by 2026 as it innovates and expands its profitable lineup of athleisure products. This doesn't seem to be a far-flung goal by any means. Looking at its performance in the most recent quarter, its total revenue was up 27% on a three-year compound annual growth rate (CAGR) basis. Meanwhile, digital sales were up 46% on a three-year CAGR basis.  

Looking back over the past decade, Lululemon has grown its annual revenue and earnings by 357% and 261%, respectively, with the actual stock delivering a total return of 326%. The company continues to expand its digital and brick-and-mortar footprint and just launched a new e-commerce site and stores in Spain in the summer of 2022.

From Lululemon's origins as a yoga brand to its expansion into the full spectrum of women's fitness products to its move into menswear to, most recently, women's footwear, the company continues to innovate and unlock new sources of growth. This bodes well for its ability to deliver continued financial wins in the years ahead and reward shareholders in the process.