Cathie Wood’s company Ark Invest has had a tough time this year. After more than doubling in value in 2020, Wood’s flagship exchange-traded fund, the Ark Innovation ETF (NYSEARCA:ARKK), sometimes referred to as Cathie Wood stocks, recently was down 7% year-to-date at $115.80 a share.
The fund’s underperformance has led many prominent investors to call into question Wood’s approach of investing in disruptive technologies and innovations.
The financial media went wild, for example, when it was revealed that Michael Burry, who famously shorted the housing market ahead of the 2008-09 financial crisis and was profiled in the book and film The Big Short, now has a large short position against the ARKK fund.
Yet Wood remains undaunted by the criticism or the performance of her funds. Rather than change her approach, Wood has been doubling down on many of her biggest bets. She is buying more shares of companies she believes in as the prices decline and believing that, eventually, the stocks will again trend higher, netting her and the shareholders that have stuck with Ark Invest large gains.
Here are four Cathie Wood stocks likely to rebound in August or the near future:
Cathie Wood Stocks: Tesla (TSLA)
First on our list of Cathie Wood stocks is electric vehicle maker Tesla. The company remains the largest single holding across Cathie Wood various funds. Currently, Ark Invest owns 4.85 million shares of TSLA stock valued at $3.4 billion.
While Wood’s team recently sold just over 70,000 shares of the company led by Elon Musk, the sale represented only about 1.5% of Ark Invest’s total holdings. Wood maintains that she is still bullish on Tesla and forecasts that the share price will be at $3,000.00 or higher by the end of 2025.
Wood has gone so far to compare Tesla to Apple (NASDAQ:AAPL) in recent interviews and has said that there is a sizable inefficiency in most analysts’ research related to the vehicle manufacturer.
While Cathie Wood clearly remains a fan of Tesla, her enthusiasm hasn’t helped the stock in recent months. After peaking at $900 a share early this year, TSLA stock has sagged and been trading between $650 and $700 since March. At its recent price of $680, Tesla’s shares are 24% below their 52-week high and struggling to vault above the $700 mark.
The company has been beset with a host of recalls and investigations related to its vehicles and their safety and that seems to have given investors pause. Still, when it comes to disruptive technology, there are few companies as visionary or ambitious as Tesla. How else to explain the “Tesla Bot?”
Teladoc Health (TDOC)
Wood’s second-largest stock holding is in telemedicine company Teladoc. Just as she is betting big that electric vehicles are the future with Tesla, Wood is also placing a huge bet that virtual doctor visits conducted via video conference are the future of healthcare in the developed world.
And Ark Invest continues buying shares of Teladoc each time the price goes down. Following the company’s latest quarterly earnings, which showed a wider than expected loss, TDOC stock swooned and Ark Invest snapped up 713,842 shares worth $108.37 million.
Wood’s company now owns a total of 14.1 million Teladoc shares across three funds that is worth a total of $2.12 billion.
Wood’s continued purchase of TDOC stock shows real conviction considering that the share price has fallen from a 52-week high of $308 in March to $140 recently, a massive decline of 55%.
The stock has been hurt by the rotation out of technology names and into cyclicals, as well as by the perception that telehealth will decline as the Covid-19 pandemic ebbs. Yet it is clear from the continued buying that Wood feels it is only a matter of time before the share price of Teladoc stock rebounds in a big way.
As with some other Cathie Wood stocks, Ark Invest seems unfazed by the fact that Teladoc is not yet profitable and is treating the stock as a buy the dip at every opportunity play.
Cathie Wood Stocks: Roku (ROKU)
Roku, the maker of internet connected television sets, is another Cathie Wood stocks’ favorite. On Aug. 8, Ark Invest snapped up 48,880 shares of ROKU stock worth $19.14 million after the share price fell following the company’s second-quarter earnings report. Ark Invest now holds a total of 3.87 million Roku shares valued at $1.56 billion.
As with Teladoc, Wood has been buying stock of Roku as the share price has dropped in recent weeks. Since peaking at $490.76 on July 26, Roku stock has declined 28% to $351.20.
The downward spiral in ROKU stock came after the company warned of tight margins related to its hardware and reported a sharp decline in viewership across its streaming service.
Investors seem to feel that Roku’s best days are behind it as people emerge from pandemic hibernation and stream less content to amuse themselves. To be sure, Roku reported that its streaming hours decreased by 1 billion hours in this year’s second quarter. That’s a big headline number that grabbed a lot of attention. In many ways, Roku has become the poster child for declining streaming numbers.
Yet, the company did beat analyst expectations for the second quarter and its total streaming hours were still 19% higher than a year ago at the pandemic’s height. Long-term, Roku should be just fine. Wood is betting on it.
Few technologies promise to be as disruptive as digital coins and tokens, and Cathie Wood is putting her money behind Coinbase, the largest cryptocurrency exchange in the U.S.
Currently the fourth biggest holding in the ARKK fund, Wood’s owns 4.63 million shares of COIN stock valued at $1.04 billion. Ark Invest owns about 2% of Coinbase based on its current market capitalization.
Wood began buying Coinbase shares when the company went public in April via a direct listing and has kept on buying in recent months. Ark Invest holds Coinbase shares across several of its ETFs and remains bullish on the company and its long-term potential.
Just how big and lucrative Coinbase stock could be for investors was made clear when the company recently reported its latest quarterly earnings. The crypto exchange reported that its year-over-year second quarter net profit grew by a gargantuan 4,900% to $1.6 billion.
That massive growth was fueled by a surge in cryptocurrency trading during the spring when prices and volatility were at their zenith. Trading in Dogecoin, in particular, was extremely high in the April to June period, according to Coinbase.
Disclosure: On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.