Cathie Wood's reputation has been tarnished a bit since her exchange-traded funds performed weakly over the past two years. She rose to investment management stardom at the beginning of the pandemic when her tech-focused funds skyrocketed in value, but she hasn't changed her approach to investing even as tech and growth stocks have plummeted. 

The Fintech Innovation Fund (ARKF 0.66%), for example, is down 70% over the past year, and the decline in price completely wiped out the high gains it posted in 2020; it's down 28% over the past three years.

Wood buckled down on her insistence that these stocks are the future of the economy and will recover, offering fabulous wealth generation potential. Whether or not you agree with her assessment, some of her stocks look like great deals right now. I would put Shopify (SHOP 0.29%) and MercadoLibre (MELI 1.09%) on your shopping list.

Down in the dumps, but tons of potential

Shopify has been humbled, losing nearly 80% of its value over the past year. That's been tough for shareholders, but it's important to remember that even with great stocks, there are ups and downs. Shopify stock still gained 189% over the past five years, and has the potential to do that again.

Management admitted that, like other companies dealing with soaring demand earlier in the pandemic, it overshot when it expanded to meet that demand. The company is now left with slowing sales growth and too much infrastructure. But it's still posting double-digit growth, and correcting by cutting expenses to fit current demand levels.

Revenue increased 16% over last year in the 2022 second quarter to $1.3 billion. Monthly recurring revenue (MRR) continues to increase as a percentage of the whole, growing 13% year over year in Q2 and rising from 26% to 31% of total sales. That's a good indication of the company's stability and importance to its merchants.

There were many other signs of growth as well, such as increasing merchants on the platform and more upsells for merchants signing on to more services. Merchants who are happy with Shopify are also switching to use it as their main payment processor, and gross merchandise volume from physical stores increased 47% year over year.

However, inflation and rising costs everywhere will affect Shopify in the near term. While it continues to wind down some of its expenses, it's expecting an operating loss in the third quarter after posting one in Q2 and after strong profitability in previous quarters.

These are temporary and global issues. Shopify has been profitable at scale in the past, and a growing and satisfied customer base indicates Shopify has robust long-term potential. At the current price, it's a stock to consider adding to your portfolio.

Dominating Latin American e-commerce

Unlike most tech companies, MercadoLibre is still posting high growth even in the pressured economy. Triple-digit growth has been replaced by high double-digit growth, which is quite a feat under current conditions.

Yet, MercadoLibre stock is down 44% over the past year. Investors were willing to pay a higher premium when growth was astronomical, and although growth is still strong, the premium has come down. That spells opportunity.

Revenue increased 57% year over year in Q2 2022 to $2.6 billion. But management focused on the bottom line as well, and it has implemented a number of cost-saving and efficiency-promoting ventures to keep the company not just growing, but viable. Net income almost doubled to $123 million, and the profit margin rose from 4% to 4.7%. And the potential for future growth remains enormous.

E-commerce remains the company's cash engine, but fintech looks like its growth engine. MercadoLibre's digital payments app, Mercado Pago, has been especially popular, and consumer digital payments increased 189% currency neutral in Q2 over last year.

Fintech is still undertapped, specifically in Latin America. There are many start-ups created to address this, but MercadoLibre is leading the way. With its current dominance and stress on becoming more efficient, it has excellent prospects for maintaining its lead. As an illustration, potential competitor Sea Limited (NYSE: SE) is winding down its expansion plans in Latin America to focus on profitability.

At the current price, MercadoLibre stock trades at 4.6 times trailing 12-month sales. That's not cheap in this market, but it looks reasonable for a stock growing as fast as MercadoLibre, and it's close to the cheapest it's been trading at in more than five years.

Chart showing MercadoLibre's PS ratio falling since 2021.

MELI PS Ratio data by YCharts

MercadoLibre is a profitable company with huge growth prospects, and at this price, it's a no-brainer to add to your portfolio.