For growth investors, there are few stock pickers who have generated more attention over the past few years than Ark Invest CEO Cathie Wood. During the incredible post-pandemic run-up in top growth names, various so-called Cathie Wood stocks outperformed by an incredible margin. Thus, as far as picking high-beta stocks that move with tremendous momentum during bull market rallies, Ms. Wood knows what she’s doing.
Unfortunately, 2022 has not been so friendly to this group of companies. The Cathie Wood stocks that outperformed in 2020 and 2021 also got pummeled last year. Many reasons exist for why this happened: higher interest rates, less speculative fervor in the markets, and a return to focus on valuation from many investors.
That said, for those who believe 2023 has brought about a new wave of potential for growth stocks, now may be the time to look at these three Cathie Wood stocks. These companies are on my buy list right now as potential long-term picks in a beaten-down market for growth companies.
| ZM | Zoom | $76.77 |
| TDOC | Teladoc | $30.57 |
| SQ | Block | $76.18 |
Zoom (ZM)
One of the most-pummeled Cathie Wood stocks in the market over the past year, Zoom (NASDAQ:ZM) is a top idea for investors looking to play what could be an impressive risk-on rally in 2023.
Indeed, after getting cut more than in half in 2022, ZM stock is now up an excellent 17% on a year-to-date basis thus far in 2023 (at the time of writing). Of course, there’s plenty of room to run higher if this stock challenges its previous all-time highs.
Like other pandemic darlings, Zoom is a company that benefited from the euphoria around growth stocks permeating from the stay-at-home culture brewing in 2020 and 2021. With most of the world back to normal, such companies may seem like their catalysts are behind them.
That said, many such software-focused growth stocks are being discarded indiscriminately. Zoom’s core business model is one that can succeed a decade down the road. This company has a technological moat, a superior product, and a substantial market share.
Additionally, Zoom’s ability to pump out continued profits has allowed the company to build a cash buffer of $5.5 billion. Few companies can clearly say that right now.
Teladoc (TDOC)
One of the more well-known Cathie Wood stocks, Teladoc (NYSE:TDOC), is also on my list of stocks to buy. The reasoning behind my bullish stance on Teladoc is straightforward – it is a virtual healthcare company based in the United States.
In uncertain times, investing in defensive sectors such as healthcare is a wise choice. Despite its heavy tech orientation, Teladoc has been performing well recently as investors seek stability. This has made Teladoc a relative outperformer in comparison to other stocks.
The strength of Teladoc as a reliable, long-term investment is reflected in its latest earnings report. With Q4 revenues reaching $611.4 million, a 17.2% increase from the previous year, the company consistently exceeded expectations on both EPS and revenue. This solid performance and its standing as a virtual healthcare leader make Teladoc a strong choice for defensive investment.
Indeed, there is always a possibility that the stock price of Teladoc may decline further. However, if you are looking for a defensive stock pick from Cathie Wood’s portfolio, Teladoc is one of the top contenders.
Block (SQ)
The company previously known as Square, Block (NYSE:SQ) rounds out this list of Cathie Wood stocks to buy nicely. That’s because this fintech, hardware, and software giant has seen impressive growth that I think is sustainable over the long term.
The company’s recent results were reassuring. Block brought in a gross profit of $1.57 billion in its most recent quarter. This number repressed 38% year-over-year growth but also beat Wall Street expectations. If the company can pump out such profit metrics over the long term, its valuation of less than $50 billion will seem cheap.
I think that such a scenario is certainly probable. Block’s impressive growth has been driven by solid uptake in its Cash App division. As the company grows its business among less-affluent individuals, its mass-market strategy could really pay off. This division alone reported more than 50% growth in gross profits, and its Cash debit card usage surged around 40% year-over-year.
For those looking to play the fintech space, Block remains my top pick to consider right now. This is one stock I think Cathie Wood is right on the money with.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.