In 2022, all three major U.S. financial indexes delivered their worst annual returns since 2008, but money manager Ken Griffin had a phenomenal year. His hedge fund, Citadel, earned a record $16 billion in profits as its flagship Wellington fund soared 38% for the year. Citadel is now the most successful hedge fund in history.

Here are two growth stocks Ken Griffin has been buying hand over fist. Both rank among Citadel's top 10 holdings, which implies the billionaire has high conviction in both companies. 

1. PayPal

Citadel increased its stake in PayPal (PYPL -1.68%) tenfold in 2022, and excluding numerous options, it ranks as the hedge fund's sixth-largest position. The investment thesis is simple: Digital payments are becoming more prevalent offline and online as mobile wallets and e-commerce gain traction with consumers, and PayPal is well-positioned to benefit from that trend.

Admittedly, the fintech company struggled early last year as economic conditions worsened. Changes in consumer spending brought on by high inflation, coupled with unfavorable foreign exchange rates brought on by the strong U.S. dollar, led PayPal to pull its medium-term financial targets. But management was quick to cut costs and refocus investments on its digital wallets and checkout solutions, two areas where PayPal benefits from a strong competitive position, and those efforts have already had a material impact.

Revenue increased just 7% to $7.4 billion in the fourth quarter, but non-GAAP (adjusted) earnings jumped 11%, up from negative 28% in the first quarter. The company plans to cut another $1.6 billion in expenses this year, and management believes that will result in 18% non-GAAP earnings growth. Investors can expect that momentum to continue into the future, especially in a more favorable economic environment.

PayPal is the most accepted digital wallet in North America and Europe, and it leads the industry with 42% market share in online payment processing, according to Statista. PayPal was also the second-most-downloaded finance app worldwide last year. Those statistics indicate the company is exceptionally well positioned to benefit as consumers spend more money online, but PayPal is also working to expand its footprint at physical points of sale (POS).

The company launched the Zettle Terminal in the U.S. last year, a POS solution for small and medium-sized businesses. PayPal also partnered with Apple to allow consumers to store PayPal and Venmo-branded payment cards in their Apple Wallets and use them anywhere Apple Pay is accepted. That could be particularly momentous because Apple Pay is the most popular in-store mobile wallet in the U.S.

Currently, shares trade at 3 times sales, essentially the cheapest valuation since PayPal was spun off from eBay in 2015. Patient investors should jump on that opportunity and buy a few shares of this growth stock.

2. Adobe

Citadel increased its stake in Adobe (ADBE 0.68%) tenfold in 2022, and excluding numerous options held by the hedge fund, it ranks as its fourth-largest holding. The investment thesis is straightforward: Adobe offers a broad range of digital media and digital experience software that helps businesses create content and engage consumers.

Adobe breaks its business into three clouds. Creative Cloud is a suite of creativity software that includes Photoshop for image editing, Premiere Pro for video editing, and Illustrator for graphic design, all three of which are market-leading products. Creative Cloud also includes applications for newer media types, like Substance for 3D design and Aero for augmented reality projects. Similarly, Document Cloud comprises software and services for PDF documents and e-signatures, including the ubiquitous Acrobat Reader.

But Adobe truly shines because it complements Creative Cloud and Document Cloud with Experience Cloud, a suite of software for analytics, marketing, and commerce. Those solutions help businesses manage consumer data, target marketing content, and provide personalized shopping experiences across digital channels. Adobe received widespread praise from industry analysts for its Experience Cloud products. Most recently, Forrester Research cited its leadership in enterprise marketing suites and digital intelligence platforms, and consultancy Gartner named Adobe a leader in digital experience platforms.

Adobe topped consensus estimates on the top and bottom lines in the most recent quarter, though its financial performance was still lackluster due to the challenging economic environment. Revenue increased 9% to $4.6 billion and earnings climbed 2% to $2.71 per diluted share. Investors should expect growth to accelerate when the economy regains its momentum.

As a caveat, Adobe intends to buy collaborative design platform Figma for $20 billion in cash and stock, but the Department of Justice (DOJ) recently filed a lawsuit to block the acquisition. Figma is wildly popular with creative professionals and, based on the limited financial information available, it appears to be in good shape. Its net dollar retention rate exceeds 150%, meaning the average customer is spending at least 50% more each year, and the business is generating positive cash from operations.

However, Wall Street seems to have mixed feelings about the acquisition. Adobe stock fell after the company announced the merger, and it also fell after the DOJ announced it would try to block the merger. But the future looks bright for Adobe either way, and investors should consider adding a few shares to their portfolios. The company has a strong competitive position in several markets that should continue to grow as organizations push for digital transformation, and shares currently trade at 9.6 times sales, a bargain to the three-year average of 15.2 times sales. That creates an attractive buying opportunity.