If we're playing a game of word association -- and the name Cathie Wood comes up -- you're likely to respond with growth investing. Wood is the CEO, co-founder, and primary stock picker for the ARK Invest family of exchange-traded funds. It's a haven for disruptors with sky-high aspirations and even loftier valuations.
There is still value to be had if you dig deep into Wood's collection of investments. Caterpillar (CAT -7.02%), Teladoc Health (TDOC -2.91%), and Roku (ROKU 1.58%) are three stocks that are trading at bargain prices. If you have $500 to invest in growth stock bargains, Wood's a good one to watch after her portfolio was pounded last year. You may want to find a broker that allows you to buy fractional shares to milk as much as you can of your $500, but let's take a closer look at these three bargains in Wood's funds.
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Caterpillar
You may not think about Caterpillar as a prototypical Wood stock. The world's leading manufacturer of construction and mining equipment isn't necessarily disruptive. However, demand is strong for Caterpillar's products. It's an infrastructure play in a world that needs building or rebuilding. It's a timely play on mining as well as gas engines and turbines.
Caterpillar is growing. Sales rose 23% in its latest quarter, and 22% for all of last year. The bottom line is also climbing nicely, and the blue chip stock is now trading for less than 20 times this year's projected earnings and less than 17 times next year's target. Caterpillar is a money machine, and it's returning a good chunk of that to its shareholders. It returned $5 billion to its investors last year through share buybacks and its 2% yield. Despite the highly cyclical nature of Caterpillar's business, it's a Dividend Aristocrat, coming through with 27 consecutive years of payout hikes.
Teladoc Health
The future of healthcare is on sale. You won't find dividend distributions or even positive earnings here, but the stock has all of the symptoms of a bargain stock. Shares of telehealth specialist Teladoc is trading 77% below their peak in February of last year. Providing virtual medical care went mainstream in 2020 when we couldn't visit doctors, therapists, or medical experts in person. Teladoc Health lets anyone use a phone, PC, tablet, or other video device for a consultation.
Competition is intensifying in this space now that it's viable, but Teladoc is still growing. Revenue rose 45% in its latest quarter, fueled largely by a 41% increase in the number of virtual visits it fulfilled. Teladoc is still a couple of years away from getting out of the red, but with revenue climbing and the stock sliding, it's now trading for less than six times trailing revenue. The top-line multiple may not seem cheap, but it's a bargain for game-changing healthcare technology.
Roku
Another former growth stock that has fallen hard is Roku. The pioneer of streaming video is now trading 74% below last summer's all-time high. Roku has run into some problems these days with supply chain constraints and growing content costs, but it continues to be a hit with folks who are spending more time in their living rooms streaming popular video services.
Roku is the top streaming platform in the U.S., Canada, and Mexico. It recently topped 60 million active accounts, averaging more than three hours a day per user on the platform. Average revenue per user is soaring -- up 43% over the past year -- as marketers try to reach the captive audience that is getting harder to reach.
Growth is not going away. Analysts see revenue roughly tripling in the next five years, and by then analysts see Roku earning more than $4 a share. It can probably get there faster if it can keep scaling. Caterpillar, Teladoc, and Roku are strong growth stocks with healthy double-digit revenue gains and years of upside. They are trading at bargain prices.
