Investors follow Cathie Wood because her favorite buys have led to big gains. Wood's flagship Ark Innovation ETF soared more than 500% from its 2014 debut through 2020. The famous investor's performance has suffered as of late because her picks tend to be cutting-edge growth companies -- which many have fled during the market downturn.
But Wood's short-term performance and these stocks' declines shouldn't scare us away. Wood bets on the long term, and so should we. Over time, the outlooks for her favorite companies look bright. And today, these beaten-down stocks are trading at bargain prices. That's why now looks like a great time to scoop them up. Let's check out two of these cheap buys for 2023.
1. Teladoc Health
Woods has been regularly snapping up shares of Teladoc Health (TDOC -2.91%) over the past month or so. And it's easy to understand why. The telemedicine leader is trading at a record low in relation to sales. That's after plummeting 74% last year.
But this isn't just about buying a stock because it's fallen considerably. There are plenty of reasons to believe Teladoc can deliver growth -- and share performance -- down the road.
The company saw its revenue and online visits triple during the early stages of the pandemic. Importantly, this isn't a pandemic-only stock. Revenue and visits were increasing already prior to the health crisis. And these days, Teladoc continues to report double-digit growth in revenue and visits each quarter.
Teladoc already has a solid customer base -- more than 92 million U.S. lives have access to the company's offerings. This is out of a total of 298 insured U.S. lives. So, there's territory to conquer, and that means growth opportunities.
The healthcare company last week increased its full-year 2022 revenue guidance range to $2.40 billion to $2.41 billion from $2.39 billion to $2.41 billion, according to Fierce Healthcare. Teladoc's mental health business, BetterHelp, drove gains in the most recent quarter, the company said.
That unit, chronic care, and Teladoc's aim to care for the "whole person" make it an innovative player that could continue its lead in this high-growth market. And that's why Teladoc makes a great bargain buy right now for long-term investors.
2. Tesla
In recent weeks, Woods has been buying shares of Tesla (TSLA 4.96%) regularly as well. The stock sank 65% last year as investors worried about chief executive officer Elon Musk's focus on his purchase of Twitter -- and that electric vehicle (EV) rivals would erode Tesla's market share.
Musk has demonstrated his ability to handle various projects simultaneously in the past. So I'm not worried about his attention straying from Tesla. As for rivals, they may take some share. But Tesla has brand strength that could keep it steadily in the driver's seat over time. The company holds 86% of the luxury EV market in the U.S., according to S&P Global Mobility. That's an encouraging sign.
Now, let's look at earnings. Even in today's difficult economic context, Tesla has managed to report record revenue, operating profit, and free cash flow. For example, higher materials costs and unfavorable currency exchanges are big headwinds. And Tesla has maintained an operating margin of more than 17%, among the highest in the auto industry.
Tesla's goal is to increase annual deliveries by an average of 50% over time. Last year, it increased deliveries by 40%, making this goal look attainable -- especially once the overall economic environment improves.
Tesla shares trade for 23 times forward earnings estimates. That's down from more than 150 a year ago. Considering Tesla's leadership today and earnings strength during difficult times, I'm optimistic about what the company can do moving forward. And that's why today's price for this innovative Cathie Wood favorite looks dirt cheap.
