When Cathie Wood makes big stock purchases the market pays attention. The well-known investor has a long track record of picking disruptive companies that have high growth potential. Now that the market is down, some of those stocks are looking like good values. Three of her holdings stood out to me. 

Zoom Video Communications (ZM 1.29%) accounts for 8.9% of ARK Innovation ETF's (ARKK 1.95%) portfolio, Block (SQ 4.83%) makes up 5.4%, and Coinbase (COIN 11.39%) is 3.5% of what the ETF holds. Here's why I like these as not only growth stocks, but also as value stocks. 

1. Zoom Video Communications

I have not been a fan of Zoom Video Communications stock for most of the past three years. But with the stock trading 87% off all-time highs, the sell-off seems a little overdone. You can see below that Zoom's net income fell over the past year, which is understandable given much of the world has reduced pandemic restrictions. But the company is still profitable and it's still growing. 

ZM Percent Off All-Time High Chart

ZM Percent Off All-Time High data by YCharts

I think the video conferencing business will remain valuable long-term, and Zoom is the one independent company with scale in the space. That may be seen as a negative for some companies, but for small companies and those who want more optionality from the tech conglomerates, Zoom is a great option. 

The biggest problem with Zoom is the company's stock-based compensation. In the first three quarters of 2022, the company spent $780.7 million on stock-based compensation for just 8,422 employees. That works out to $92,698 in compensation per employee for just nine months. That's incredibly high for any company, and if Zoom is going to be a good investment long-term, it will need to get that cost under control.

2. Block

Block's strategy of creating apps for buyers (Cash App) and sellers (Square) has worked extremely well over the last few years, and it is now a juggernaut in finance. In the third quarter of 2022, the Cash App reported gross profit of $774 million, up 51% from a year ago, and Square gross profit was up 29% to $783 million.

Block isn't yet profitable given its $15 million loss last quarter. But the company reported $327 million in adjusted EBITDA, but operations generated $130.5 million in cash in the first nine months of the year, leaving the company with $7.6 billion in cash on the balance sheet. 

Over time, Block has shown it can expand its business and increase margins in both the Cash App and Square sides of the business. If that continues, the stock is reasonably priced at 2.1 times sales. The company needs to increase profitability to generate great returns long-term, but I think the upside potential is worth the risk for this fintech stock. 

3. Coinbase

When I think of a Cathie Wood stock, Coinbase is the kind of stock I think of first. It's a leader in an emerging market, and it's risky, but the upside is potentially many times bigger than the downside risk. 

I highlighted earlier this month that Coinbase is so cheap that when you include its cash on the balance sheet and cash flow coming from its stake in the USDC stablecoin, investors are essentially getting the rest of the business for free. That's a great value if Web3 has a bright future

It's understandable that many investors may not think crypto and Web3 will be much of anything, but for those who are bullish Coinbase is in a great position. It has an exchange that keeps operating through turbulent markets in highly regulated regions. On top of that, it's building cloud services that could power future Web3 businesses and is a leading prime service provider for institutions.

Investors who don't believe in the value of the blockchain may overlook Coinbase, but this is a company that will power a lot of Web3 services, and it'll likely be done in the background without users ever knowing they're interacting with crypto and NFTs. 

Risk and reward in Cathie Wood stocks

These stocks aren't guaranteed winners, but they could generate outsized returns if their businesses continue to grow and profits increase. I think their values are now more compelling than they've been in years, and that's why they're the Cathie Wood stocks I like the most.