3 ‘Stay-Connected’ Bargain Stocks Sitting in Cathie Wood’s Flagship Fund

“Companies are learning how powerful technology can be on holding the line on costs,” Wood said during a webinar last month.

She even pushed back on the notion that a large portion of her portfolio – made up of so-called stay-at-home-stocks – only rallied in recent years because of COVID-induced lockdowns.

“They are not stay-at-home stocks, they are stay-connected stocks,” she said.

Let’s take a quick look at three of those plays sitting in Wood’s portfolio. It might be an opportune time to dive in.

Teladoc Health (TDOC)

Teladoc Health is one of the leading telemedicine companies in the U.S., with a consistent track record of revenue growth and margin improvement.

It should come as no surprise that Teladoc has benefited tremendously from the extraordinary environment brought on by COVID-19. When non-life-threatening, in-office medical care was put on hold during the peak of the pandemic, telehealth adoption exploded.

Teladoc’s revenue increased 98% in 2020 to $1.09 billion, with total visits surging 156%.

While the company hasn’t reported full-year 2021 results yet, management is projecting a top-line of between $2.015 billion and $2.025 billion — a range that would mark a substantial improvement from 2020.

Teladoc stock is down 21% year to date, but it remains Ark Innovation’s second-largest holding, accounting for 6.7% of the fund’s weight.

At the webinar, Wood said that Teladoc would become the “backbone” of the U.S. healthcare system.

Zoom Video Communications (ZM)

As meetings and classes moved online due to the pandemic, Zoom’s business flourished.

The stock skyrocketed from the $60s at the beginning of 2020 to over $560 apiece by October of that year. But today, the company is trading around $140 per share — not a pleasant ride if you got on the rollercoaster late.

Wood hasn’t tempered her bullishness for the video communications leader, proclaiming that Zoom should “have stunning growth rates ahead.”

Wood’s flagship ETF now owns more than 5.3 million shares of the company with a portfolio weighting of 6.4%.

She might be onto something.

While the economy has largely reopened, Zoom’s business is still firing on all cylinders. In the fiscal quarter ended Oct. 31, 2021, revenue surged 35% over the year-ago period to $1.05 billion.

Zoom also has a growing base of lucrative customers. The number of customers spending more than $100,000 nearly doubled year over year.

Roku (ROKU)

The on-demand video streaming industry is not just a pandemic play — the cord-cutting movement began way before COVID-19 came along.

And Roku has done well to capitalize on this megatrend.