Cathie Wood stocks may not have as many fans today as when Wood’s Ark Invest funds were putting the markets to absolute shame back in 2020. Undoubtedly, Wood may be a seasoned investor with intriguing viewpoints on disruptive innovation and the markets as a whole.
There’s no arguing that Ark Investment Management found itself in the right place at the right time in 2020. The Federal Reserve slashed rates while many people were couped up at home during lockdown, thinking Covid-19 would keep us homebound for the long haul. But as the economy reopened and investors anticipated higher rates, disruptive innovation went out of style about as quickly as it came into fashion.
Until now, the Cathie Wood stocks haven’t gained much ground since the market bottomed out around a year ago. But what about once investors get pumped up about the rate cuts to come?
Could we be in for 2020-21 all over again? It’s tough to tell. Either way, the following Cathie Wood stocks seem too cheap to pass up, given the potential catalysts ahead.
Coinbase (COIN)
Coinbase (NASDAQ:COIN) is the new captain of the flagship ARK Innovation Fund (NYSEARCA:ARKK) after doing more than its fair share of the heavy lifting in the past year.
The popular crypto exchange platform has really been enjoying higher Bitcoin (BTC-USD) and renewed interest in other crypto assets. At writing, COIN stock is up a jarring 345% in the past year. That explosive momentum tops even the great Nvidia (NASDAQ:NVDA) for performance over the past year.
As the page turns on the first half of 2024, the blistering performance could certainly reverse course. A cooldown period is definitely needed after such a scorching run. Fortunately, I don’t view COIN stock as insanely overvalued at 36.3 times forward price-to-earnings (P/E). It’s not even at all-time highs yet!
Coinbase will likely over earn in “crypto spring and summer,” and underearn in “crypto winter.” However, I continue to view COIN stock as a superior long-term investment to Bitcoin or any other cryptocurrency itself — especially as crypto summer stands to heat up in time for real summer.
Further, Coinbase isn’t just a beneficiary of increased crypto trading; the company is building the blockchain infrastructure of the future. Given this, I’d argue that Coinbase should garner interest in the crypto asset class, not the other way around.
Roku (ROKU)
Roku (NASDAQ:ROKU) remains a fairly sizeable holding in the flagship ARKK ETF, even after dragging in recent quarters. Over the past two years, ROKU is down more than 37%. At this juncture, the streaming underdog seems destined to stay in the doghouse for longer, especially as the firm struggles to push into sustained profitability.
While Roku’s financials may not be glimmering, perhaps most investors aren’t viewing the firm in the same light as Cathie Wood. The company behind popular streaming sticks could benefit greatly as interest rates begin to fall. This would reduce the weight of debts and trim borrowing costs, allowing Roku to spend more to regain an edge in the streaming world.
As streamers look to live sports as an arena to attract viewers, I think Roku has a chance to swing for a grand slam. Just last month, Roku began streaming MLB matches exclusively on its platform via The Roku Channel for free. Indeed, offering free sports will not only help fire back at streaming rivals, it could deliver a gut-punch to cable TV while it’s already on the ropes.
I think free sports will be a home run among viewers. As more consumers cut costs, perhaps it makes more sense to ditch subscriptions and tune into the Roku Channel, especially if you’re a casual baseball fan.
Teledoc (TDOC)
Teledoc (NASDAQ:TDOC) isn’t just a pandemic bubble that many investors have long forgotten about. Though Ark Invest has reduced its stake considerably (by 399,982 shares in May) in recent months, Wood and company remain large investors in the firm, and I don’t see that changing anytime soon.
The medium-term outlook has been cloudier following the departure of CEO Jason Gorevic a few months ago. As the hunt for a permanent new top boss continues, questions linger about the fate of upper management amid what can only be described as a horrid rough patch for the firm.
Even if digital doctor visits won’t eclipse lockdown-era levels, Teledoc remains one of the most undervalued top dogs in the telemedicine industry. At just 0.7 price-to-sales (P/S) and 0.82 price-to-book (P/B), Teledoc shares are basically going for bargain-basement prices.
Moving forward, Teledoc could have an opportunity to really jolt its offering as it teams up with Amazon (NASDAQ:AMZN) to bring its services to Alexa. Perhaps a furthering of its collaboration with the AI-savvy Magnificent Seven firm could help TDOC stock rise out of its rut.
On the date of publication, Joey Frenette held shares of AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
