3 Cathie Wood Stocks That Could Run Circles Around Dogecoin | The Motley Fool (2024)

Dogecoin (DOGE -8.38%) has become all the rage, rising as much as 12,000% this year. The cryptocurrency shed 25% of its value over the weekend, however, after Tesla CEO Elon Musk -- a big proponent of the digital coin -- joked about it with his mom on Saturday Night Live.

Even after its recent slump, the cryptocurrency is up more than 8,000% so far this year. At the same time, Cathie Wood has seen the returns of her five flagship ARK Investment Management exchange-traded funds (ETFs) struggle so far this year, as disruptive emerging technology stocks have fallen temporarily out of favor.

That doesn't necessarily mean that Dogecoin will outperform Wood's picks in the coming years. In fact, here are three stocks that are big holdings of the ARK funds that could outpace Dogecoin over the long term.

Roku: The future of television

By largely bypassing the content wars, Roku (ROKU -1.04%) has carved out a lucrative niche for itself in streaming video, and its prominence will only grow from here. In just a few short years, the company has emerged as the largest streaming platform in the U.S., with 53.6 million active accounts, surpassing Amazon's Fire TV with 50 million (at last count). Roku's engagement is also soaring, as streaming hours grew to 18.3 billion in the first quarter, up 49%. That works out to roughly 3 hours and 45 minutes per day per account.

The most recent earnings showed both the power of Roku's platform and its growing leverage. While revenue jumped an impressive 79% year over year, platform revenue -- which includes revenue from digital advertising, The Roku Channel, and the licensing of its operating system (OS) -- accelerated to 101%, notching its highest rate of growth since Q1, 2018. Additionally, gross profit margin for the platform segment has climbed in each of the previous four quarters, recently clocking in at 66.9%. Its average revenue per user (ARPU) continues to grow at a healthy clip, up 32% year over year.

Roku's secret weapon is its connected TV operating system that put the company within reach of nearly every household in North America. The Roku OS was integrated into 38% of smart TVs sold in the U.S. last year, while boasting a 31% market share in Canada.

The stock is a Top 10 holding of the ARK Next Generation Internet ETF (ARKW -0.59%), coming in at No. 8, representing more than 3% of its $6.9 billion in funds under management.

MercadoLibre: A fintech leader in Latin America

While it's been called the Amazon, eBay, PayPal Holdings, and Square (SQ -1.32%) of Latin America, MercadoLibre (MELI -3.96%) has reproduced the best elements of each these internet and digital payments pioneers -- as well as many others. In doing so, it has become the leading provider of e-commerce services in the region and it's quickly becoming a fintech powerhouse.

MercadoLibre's most recent earnings report revealed a company that is truly firing on all cylinders. In Q1, it reported its fourth consecutive quarter of year-over-year revenue growth in excess of 100%. Sales in local currencies climbed 158%, driven by online retail that surged 139% and fintech revenue that jumped 72%.

Any of its impressive growth metrics could have earned the company a spot among Cathie Wood's favorite stocks. Total payment volume (TPV) continued its relentless climb, up 129%, while the number of transactions grew 117%. TPV for its digital wallet grew 192%, while the value of its lending portfolio more than doubled. The platform is also expanding into investing.

The stock is a Top 10 holding in the ARK Fintech Innovation ETF (ARKF -0.78%), grabbing the No. 6 position, representing 3.5% of its $4 billion in funds under management. MercadoLibre also represents about 1% of the $6.9 billion held in the ARK Next Generation Internet fund.

Square: Point-of-sale and so much more

There's no question that Square revolutionized point-of-sale systems for small- and medium-sized businesses with its namesake card reader that attaches to mobile devices, but that was just the beginning of the company's fintech journey.

The company continues to expand its ecosystem with both merchant- and consumer-friendly offerings. Cash App, Square's person-to-person funds transfer app -- which rivals PayPal's Venmo -- has been generating blockbuster growth. This is likely due to its expanding list of services, which now includes a free debit card and the ability to invest. In the first quarter, inflows of cash to the app reached their highest level ever, which signals its robust growth is continuing.

There's also a pretty compelling cryptocurrency connection. Since Square began offering members the opportunity to trade Bitcoin on its platform, adoption has soared. Square generated first-quarter revenue that grew 266%, with roughly 31% of that generated as the result of Bitcoin transactions. The underlying growth was more impressive, with a more than 10-fold increase in Bitcoin-related revenue.

Square is unquestionably one of Cathie Woods' favorite companies. ARK holds more than 7 million shares of the fintech giant across three portfolios, worth more than $1.55 billion. It's also the No. 1 holding in the ARK Fintech Innovation ETF and the No. 4 holding in both the ARK Next Generation Internet ETF and the ARK Innovation ETF (ARKK -0.16%).

All joking aside

It's well documented that Dogecoin was created as a joke. The fact that some cryptocurrency investors are beginning to take it seriously, however, doesn't make it any less risky. Those wanting proof need look no further than the digital currency's 25% haircut last weekend -- all because Elon Musk and his mother joked about the cryptocurrency on Saturday Night Live. That alone highlights the tremendous risk for investors.

Even Dogecoin's co-creator, software developer Billy Markus, thinks the digital asset's value is ridiculous. "The idea of Dogecoin being worth $0.08 is the same as GameStop being worth $325," Markus told The Wall Street Journal earlier this year. "It doesn't make sense. It's super absurd. The coin design was absurd." It's worth noting that GameStop stock and Dogecoin are now priced at roughly $145 and $0.46, respectively, as of this writing.

For those looking for something a little more substantial on which to base an investing thesis, these Cathie Wood stocks are fueled by robust, ongoing trends and have the potential to run circles around Dogecoin.