Cathie Wood Stocks To Buy Now: Cathie Wood’s focus on disruptive innovation has paid off in spades. She’s caught the wave of the trend towards virtualization, electric vehicles, better battery technology, cryptocurrencies and more. But not all stocks in her funds have been on a tear lately. Some have pulled back and offer an opportunity to meet her stated hurdle rate of 15% annually. Here are five of her best stocks to buy right now.
Cathie Sold Tesla At Highs & Bought The Dip
Cathie Wood’s belief in Elon Musk’s electric vehicle company didn’t wane last month, despite Tesla’s share price dropping after the release of its latest quarterly earnings. Instead, ARK Investment Management doubled-down and invested a further $35 million into the operation, adding just under 50,000 shares to its already Tesla-heavy portfolio.
Surprisingly, ARK had sold some of its holdings in the company only weeks before. Perhaps the fund was taking advantage of the Tesla price volatility, swing trading its way to a quick short-term profit.
Either way, Tesla remains the largest of ARK’s investments, representing a little under 10% of its ARK Innovation ETF’s total weight.
Cathie Wood’s confidence in the car manufacturer is semi-legendary; it was her intervention back in 2018 that reportedly led to Elon Musk changing his mind on taking the firm private after its public float, and her bullish claims of a $4 trillion market capitalization has had investors salivating for a while now.
But the fundamental principles of Tesla’s business strategy are grist to the ARK Invest mill. A disruptive company offering a plethora of converging technologies all under one umbrella is an irresistible prospect. Cathie Wood even drives a Tesla herself – and hasn’t been shy about singing its praises.
For many watchers on Wall Street, the fortunes of Tesla and ARK Invest are now thoroughly entwined. And as long as Cathie Wood has trust in the company, there seems little reason why others shouldn’t too.
ARK Sold Tesla To Buy Coinbase
There aren’t many companies that Cathie Wood would sell her precious Tesla shares for, but Coinbase would be a rare example.
So, what makes Coinbase so special in the eyes of ARK Invest’s fund managers?
First, Coinbase is primed to capitalize on the explosion of interest in the cryptocurrency space. The company is the leading crypto-exchange in America, with millions of other individual customers, partners and institutions is spread across more than 100 other countries.
The firm’s ecosystem is unrivaled in its ability to cater to the expert trader and the most inexperienced newbie enthusiast.
Second, Cathie Wood has been a long-time believer in cryptocurrencies as an investment asset, first buying Bitcoin as far back as 2015. And her interest doesn’t end there; she’s on record as saying that blockchain technology has the potential to disrupt the landscape of the financial world in several ways.
Indeed, ARK has really put its money where its mouth is with regard to its conviction in crypto-assets. Coinbase shares are included in three of ARK Invest’s most important funds: the ARK Next Generation Internet ETF (ARKW); the ARK Innovation ETF (ARKK); and the ARK Fintech Innovation ETF (ARKF). The total dollar value of these holdings are worth an estimated $580 million.
And, finally, Cathie Wood sees the crypto-space as a fledging industry, with huge growth potential and massive profits that come along with it.
As it stands, the general public still doesn’t fully grasp the possibilities of blockchain technology, and mainstream institutional investors have yet to move into crypto-assets in a sizeable way. But when they do, the impact on the entire market should be huge, driving valuation and capitalization skywards.
Sea Limited Share Price Tumble Seized By Cathie
As one of the ARK Fintech Innovation ETF’s Top 5 investments, Sea Limited is a pivotal holding so it can’t have been too pleasing for Cathie Wood to have seen Sea Limited’s share price tumble more than 30% between February and March of this year.
However, such is her faith in the online sales platform, that the dip was merely an excuse for ARK Invest to stock up on the holding and add more Sea Limited shares to the portfolio.
The company makes for an attractive buy for the ARK team due to its high growth, triple-pronged segments in the eCommerce, Digital Entertainment and Finance sectors.
And though not all of these wings make a profit – in fact, only Garena, its Digital Entertainment operation brought in positive EBITDA of $1.9 billion – the company is still in good shape.
Its eCommerce brand, Shopee, saw year-on-year revenue growth of 160%, and is now using its free cash flow to expand the business. Likewise, SeaMoney, a mobile wallet, took in a huge $7.8 billion in payments last year.
But, most importantly, Sea Limited has plenty of opportunities to break into the key global markets of South East Asia and Latin America as the digitization of these economies gathers pace. Its management has put aside $1 billion to penetrate those markets further, and with the verticals it already serves, the firm offers an excellent risk-reward profile for future investors.
Cathie Wood Owns 800,000 DraftKings Shares
Having first purchased DraftKings stock back in February of this year, this online sports betting company makes it into two of Cathie Wood’s hig-performing exchange-traded funds, with ARK Invest adding more shares to both its ARK Next Generation Internet ETF and its ARK Fintech Innovation ETF again in March.
ARK’s total stake in DraftKings now stands at just under 800,000 shares, worth around the $125 million mark.
And it’s not just Cathie Wood who is so bullish on DraftKings. Guggenheim analysts recently upgraded the stock to a Buy rating, citing a potential $10 billion opportunity in the North America online sports market, solid 30%+ EBITDA margins, and the company’s proprietary technology stack as key.
Other tailwinds driving the growth of online betting include the general momentum towards gambling legalization in new states, the many references to online sports betting by NFL commissioner during the recent player draft, as well as the rising revenues being generated in places like New Jersey that already cater to online pundits.
Although DraftKings isn’t yet profitable, the firm is growing its top-line number at a rapid rate, with a year-on-year revenue growth of over 90% that can’t easily be ignored.
A forward Price-to-sales multiple of 22x seems fair given that the company is still expanding, and the brand’s leading recognition factor makes it one of the safest plays in the online gambling space.
Teladoc Is ARK’s 2nd Largest Holding
Teladoc is another company that makes an appearance in three of ARK’s investment funds – indeed, the firm is ARK’s second largest holding after Tesla.
It has to be said, though, that Teladoc hasn’t made a great start to the year. Its stock is down around 45% from its 2021 high of $308 and has lost roughly 10% from the beginning of January to trade in the mid-$100s.
However, Teladoc posted good quarterly results in its latest filing, with revenue up year-on-year by 151% at $496 million, and the firm maintaining its peak U.S. paying members of 51.5 million from Q2 2020.
The company also expects solid full year metrics, with adjusted EBITDA of between $255 million and $275 million, and total visits to be as high as 13.5 million.
But why does ARK have so much faith in Teladoc? The answer is simple; Teladoc is a long-term play in the disruptive and technologically sophisticated tele-medicine industry, and Cathie Wood and her colleagues see the inherent growth possibilities as being highly attractive.
Furthermore, a large part of the company’s net loss in Q1 was down to its buy-out deals of InTouch Heath and Livongo, two acquisitions that will grow revenues in the future and no doubt prove to very profitable.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.