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3 Cooled-Off Cathie Wood Stocks Set for a Big Rebound in 2022
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The pandemic is a blessing in disguise for many. Cathie Wood, the founder of Ark Innovation ETF (ARKK - Free Report) is certainly among them. Wood, who is known for accumulating disruptive tech stocks for ARK Invest's exchange-traded funds (ETFs) saw huge returns in 2020.
However, this year hasn’t been that great for her flagship fund, Ark Innovation ETF, as inflation worries have taken a toll on high-growth stocks. That, however, hasn’t dented the confidence of the famed growth investors. These three cooled off stocks — DocuSign, Inc. (DOCU - Free Report) , Zoom Video Communications (ZM - Free Report) and Tesla, Inc. (TSLA - Free Report) still have enough potential to rebound in a big way in 2021.
Ark Innovation Struggling
Wood was one of the few successful growth investors last year. Her collection of growth-oriented ETFs reaped benefits from the pandemic, with Ark Innovation ETF rallying over 150%. Ark Innovation ETF has more than $21 billion in assets,
However, the high-growth area, particularly tech stocks, took a bad hit earlier this year and even after making a solid return has still left Ark Innovation ETF in the red on a year-to-date basis. High-returning stocks from 2020 like Teslahave so far been lower this year.
Not the End of the Road
The stocks that helped Ark Innovation ETF rally more than 150% in 2020 have been hit hard. The ETF has lost over 20% of its value in 2021 on growing inflation fears that have unsettled high-growth stocks. More than 50% of the ETF’s largest holdings are down between 37% and 52% this year.
Yet, Wood is confident of bouncing back in 2022. She expects Ark’s investment in some of the biggest disruptive tech stocks to help the ETF rebound significantly, with a 30% to 40% compound annual rate of return over the next five years.
Our Picks
Disruptive tech stocks have helped the ETF generate huge returns so far and the momentum is likely to rebound in 2022 despite some major roadblocks in 2021. Here are three Cathie Wood stocks that hold promise.
Tesla is one of the few stocks from the ARK Innovation ETF portfolio that has managed to put up a great show. Shares of TSLA have outperformed the industry over the past year. Tesla hit a milestone in the third quarter of 2021, with gross auto margins attaining a record high. Riding on robust Model 3/Y demand, Tesla saw record Q3 production and deliveries despite global microchip shortage.
TSLA’s energy generation and storage revenues are also helping its earnings prospects. Moreover, low debt to capitalization is likely to increase the electric vehicle maker’s financial flexibility.
Tesla’s expected earnings growth rate is more than 100% for the current year and 30.4% for next year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. Shares of TSLA have gained 55% year to date. Tesla sports a Zacks Rank #1 (Strong Buy).
Zoom came into prominence in 2020, following the coronavirus outbreak and emerged as one of Ark Innovation ETF’s best performers. ZM gained continued traction as more people worked and learned remotely during the peak of the pandemic. This saw its customer base growing strongly.
Although the company somewhat lost its sheen in 2021, the stock still has immense potential. Zoon’s annualized revenues during third-quarter 2021 was $4.2 billion, or 58.4% higher than in second-quarter 2020, when it was fast gaining popularity after the COVID-19 outbreak.
The company has lately been getting competition from rivals like Microsoft and Cisco but it still holds promise. ZM’s expanding international presence is a key catalyst. Moreover, Zoom has also been making efforts to eliminate the security and privacy loopholes as well as new hardware and Zoom From Home solution’s launch are expected to help in expanding its presence.
Zoom has underperformed the industry on a year-to-date basis. ZM’s expected earnings growth rate is 44.9% for the current year and 19.5% for the next five years. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. Shares of ZM have lost 44.3% year to date. Zoom carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
DocuSign is another company that redefined business during the pandemic. The pandemic demanded contactless transactions including remote signature. DocuSign, which was already into this, captured the market. However, DOCU has been taking a beating lately. After peaking at $310.05 in September, the share price fell to $156.52 on Dec 27 — almost a 50% drop.
However, the acquisitions of Seal Software and Liveoak Technologies in 2020 are expected to add functionality to DocuSign Agreement Cloud and help the company significantly. DOCU remains focused on continuously acquiring eSignature customers — now around 13,000.
DocuSign has underperformed the industry on a year-to-date basis. DOCU’s expected earnings growth rate is more than 100% for the current year and 10.7% for next year. The Zacks Consensus Estimate for current-year earnings has improved 14.5% over the past 60 days. Shares of DOCU have lost 29.6% year to date. DocuSign carries a Zacks Rank #3.
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3 Cooled-Off Cathie Wood Stocks Set for a Big Rebound in 2022
The pandemic is a blessing in disguise for many. Cathie Wood, the founder of Ark Innovation ETF (ARKK - Free Report) is certainly among them. Wood, who is known for accumulating disruptive tech stocks for ARK Invest's exchange-traded funds (ETFs) saw huge returns in 2020.
However, this year hasn’t been that great for her flagship fund, Ark Innovation ETF, as inflation worries have taken a toll on high-growth stocks. That, however, hasn’t dented the confidence of the famed growth investors. These three cooled off stocks — DocuSign, Inc. (DOCU - Free Report) , Zoom Video Communications (ZM - Free Report) and Tesla, Inc. (TSLA - Free Report) still have enough potential to rebound in a big way in 2021.
Ark Innovation Struggling
Wood was one of the few successful growth investors last year. Her collection of growth-oriented ETFs reaped benefits from the pandemic, with Ark Innovation ETF rallying over 150%. Ark Innovation ETF has more than $21 billion in assets,
However, the high-growth area, particularly tech stocks, took a bad hit earlier this year and even after making a solid return has still left Ark Innovation ETF in the red on a year-to-date basis. High-returning stocks from 2020 like Teslahave so far been lower this year.
Not the End of the Road
The stocks that helped Ark Innovation ETF rally more than 150% in 2020 have been hit hard. The ETF has lost over 20% of its value in 2021 on growing inflation fears that have unsettled high-growth stocks. More than 50% of the ETF’s largest holdings are down between 37% and 52% this year.
Yet, Wood is confident of bouncing back in 2022. She expects Ark’s investment in some of the biggest disruptive tech stocks to help the ETF rebound significantly, with a 30% to 40% compound annual rate of return over the next five years.
Our Picks
Disruptive tech stocks have helped the ETF generate huge returns so far and the momentum is likely to rebound in 2022 despite some major roadblocks in 2021. Here are three Cathie Wood stocks that hold promise.
Tesla is one of the few stocks from the ARK Innovation ETF portfolio that has managed to put up a great show. Shares of TSLA have outperformed the industry over the past year. Tesla hit a milestone in the third quarter of 2021, with gross auto margins attaining a record high. Riding on robust Model 3/Y demand, Tesla saw record Q3 production and deliveries despite global microchip shortage.
TSLA’s energy generation and storage revenues are also helping its earnings prospects. Moreover, low debt to capitalization is likely to increase the electric vehicle maker’s financial flexibility.
Tesla’s expected earnings growth rate is more than 100% for the current year and 30.4% for next year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. Shares of TSLA have gained 55% year to date. Tesla sports a Zacks Rank #1 (Strong Buy).
Zoom came into prominence in 2020, following the coronavirus outbreak and emerged as one of Ark Innovation ETF’s best performers. ZM gained continued traction as more people worked and learned remotely during the peak of the pandemic. This saw its customer base growing strongly.
Although the company somewhat lost its sheen in 2021, the stock still has immense potential. Zoon’s annualized revenues during third-quarter 2021 was $4.2 billion, or 58.4% higher than in second-quarter 2020, when it was fast gaining popularity after the COVID-19 outbreak.
The company has lately been getting competition from rivals like Microsoft and Cisco but it still holds promise. ZM’s expanding international presence is a key catalyst. Moreover, Zoom has also been making efforts to eliminate the security and privacy loopholes as well as new hardware and Zoom From Home solution’s launch are expected to help in expanding its presence.
Zoom has underperformed the industry on a year-to-date basis. ZM’s expected earnings growth rate is 44.9% for the current year and 19.5% for the next five years. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. Shares of ZM have lost 44.3% year to date. Zoom carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
DocuSign is another company that redefined business during the pandemic. The pandemic demanded contactless transactions including remote signature. DocuSign, which was already into this, captured the market. However, DOCU has been taking a beating lately. After peaking at $310.05 in September, the share price fell to $156.52 on Dec 27 — almost a 50% drop.
However, the acquisitions of Seal Software and Liveoak Technologies in 2020 are expected to add functionality to DocuSign Agreement Cloud and help the company significantly. DOCU remains focused on continuously acquiring eSignature customers — now around 13,000.
DocuSign has underperformed the industry on a year-to-date basis. DOCU’s expected earnings growth rate is more than 100% for the current year and 10.7% for next year. The Zacks Consensus Estimate for current-year earnings has improved 14.5% over the past 60 days. Shares of DOCU have lost 29.6% year to date. DocuSign carries a Zacks Rank #3.