Posted on Thursday, March 11th, 2021 by MarketBeat Staff
If you’re an investor that likes to go with the “hot hand,” then they don’t get much hotter than Cathie Wood. The founder and CEO of ARK Investment Management delivered returns of over 100% in all five of her firm’s exchange-traded funds (ETFs) in 2020.
The names of her funds showcase some of the hottest emerging growth trends in the market: financial technology (fintech), genomic revolution, innovation, autonomous technology/robotics, and next generation internet.
As you would expect, these funds contain some of the hottest growth stocks from the past year. And in the aftermath of the tech selloff, Wood is not backing away. In fact, she’s doubling down on her strategy. It might not be exactly a matter of being greedy while others are fearful; perhaps more like being prepared while others are distracted.
But the other thing about Wood’s selections is that many of them are not obscure names. These are companies that were among the hottest names in 2020. Wood simply believes that they still have room to run. And that’s one reason you should consider making them a part of your portfolio.
In this special presentation, we’re giving you just seven of the stocks that Cathie Wood is buying or has bought recently. We’ve attempted to pick out at least one stock from each of the ARK ETFs. As with any investment decision, it’s important that you perform your own research before making a decision.
#1 – Palantir Technologies (NYSE:PLTR)
The first stock on this list is perhaps the most controversial. Palantir Technologies (NYSE:PLTR) is engaged in the big data sector. But many investors have seemed to be reluctant to invest in the company. Since going public, PLTR stock may a nice run to about $30. But on two separate occasions, the stock has tested the $40 level. And each time, the stock has been knocked back.
Wood certainly seems to believe these dips are buying opportunities. She has made Palantir a big buy in her ARK Innovation ETF (NYSEARCA:ARKK). And she also purchased shares of PLTR for the ARK Next-Generation Internet ETF (NYSEARCA:ARKW).
The company’s latest earnings report showed the company continues to burn cash. However, it’s also showing growth in its private sector businesses which was a key factor in the company’s 40% year-over-year revenue growth. With the attention of hedge funds behind it, Palantir appears to be a momentum stock for 2021. And if Wood’s endorsement means anything, PLTR stock may be ready to become considerably more expensive.
About Palantir Technologies
Palantir Technologies Inc builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. The company provides Palantir Gotham, a software platform for government operatives in the defense and intelligence sectors, which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform. Read More
Current Price: $24.04
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 2 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $23.57 (1.9% Downside)
#2 – AbbVie (NYSE:ABBV)
AbbVie (NYSE:ABBV) would be a popular stock even if Cathie Wood wasn’t buying it. But she is and that is giving the stock even more momentum than it already had. Wood has made ABBV stock a key holding in the ARK Genomic Revolution ETF (NYSEARCA:ARKG). And with good reason, ABBV is consistently outperforming the broader market, which would fit Wood’s portfolio of actively managed funds.
For AbbVie the story is still about its flagship drug, Humira. And some investors have been concerned that the company’s U.S. patent is set to expire soon. The bearish argument would be that Humira has already lost patent protection outside the United States and sales of Humira were down 10% in the company’s most recent quarter.
But that’s still a couple of years down the road and by the time it happens the company is likely to have more products on the market. That’s one reason that AbbVie acquired Allergan (NYSE:AGN) in May 2020. Allergan is planning to expand its portfolio of facial aesthetics products that includes Botox Cosmetic.
AbbVie Inc discovers, develops, manufactures, and sells pharmaceuticals in the worldwide. The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal BehÃ§et’s diseases; SKYRIZI to treat moderate to severe plaque psoriasis in adults; RINVOQ, a JAK inhibitor for the treatment of moderate to severe active rheumatoid arthritis in adult patients; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenstrÃ¶m’s macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection. Read More
Current Price: $107.54
Consensus Rating: Buy
Ratings Breakdown: 14 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $115.75 (7.6% Upside)
#3 – Teladoc Health (NYSE:TDOC)
2020 was nothing if not disruptive. And that gave Wood plenty of candidates to choose from for her ARK Innovation (NYSEMKT:ARKK) ETF that focuses on companies that are providing “disruptive innovation.” Teladoc Health (NYSE:TDOC) certainly fits that description.
In some ways the concept is almost too simple to be believed. Teladoc puts a technological twist on the old-fashioned house call model. The company allows patients to have virtual appointments with their doctor. And the pandemic pushed the company to a different level that saw its total revenue increase by 98% with total visits increasing over 200%.
The doctor-patient relationship is an intimate one, and it’s unlikely that Teladoc will be able to sustain that rate of growth in the future. That may be one reason why TDOC stock is flat thus far in 2021. However, the idea of virtual doctor visits isn’t going to go away. And with the company’s strategic acquisition of Livongo Health, Teladoc has another revenue stream.
About Teladoc Health
Teladoc Health, Inc engages in the provision of telehealthcare services using a technology platform via mobile devices, the Internet, video and phone. Its portfolio of services and solutions covers medical subspecialties from non-urgent, episodic needs like flu and upper respiratory infections, to chronic, complicated medical conditions like cancer and congestive heart failure. Read More
Current Price: $181.26
Consensus Rating: Buy
Ratings Breakdown: 18 Buy Ratings, 13 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $243.00 (34.1% Upside)
#4 – Zillow Group (NASDAQ:ZG)
Financial technology (fintech) continues to be one of the hottest sectors for tech-minded investors. And Zillow Group (NASDAQ:ZG) can be very considered very trend-forward. Wood certainly seems to think so. Her ARK Fintech (NYSEARCA:ARKF) fund has taken a hefty position in ZG stock.
One statement that became true last year was that commerce found a way. And when it came to buying and selling a home during a pandemic that limits our ability to interact with one another, Zillow thrived. The company was already on the forefront of enabling online real estate transactions. However despite the pandemic, Zillow achieved year-over-year revenue growth and posted a profit on the bottom line in the last two quarters.
Like most tech stocks, it’s been a rough last month for ZG stock. However the stock is still is up approximately 15% for 2021 and will benefit as technology-led real estate transactions are likely to become a standard way of operating.
About Zillow Group
Zillow Group, Inc, a digital real estate company, operates real estate brands on mobile applications and websites in the United States. It operates through three segments: Homes; Internet, Media & Technology; and Mortgages. The company’s mobile applications and websites offers various real estate transactions and related services, including buying, selling, renting, and financing services for residential real estate properties; purchase and sale of homes; title and escrow services; title insurance products and services; and mortgage loans. Read More
Current Price: $147.60
Consensus Rating: Buy
Ratings Breakdown: 17 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $167.96 (13.8% Upside)
#5 – Shopify (NYSE:SHOP)
The Covid-19 pandemic has made it clear that the only way many retail businesses will be able to survive is with a strong web presence. Shopify (NYSE:SHOP) makes it easy for businesses of all sizes to do just that. But what makes Shopify particularly attractive is that it tends to cater a bit more to the smaller businesses that may feel underappreciated by Amazon (NASDAQ:AMZN).
SHOP stock got caught up in the tech sector wipeout and is trading basically flat for the year. Some might be thinking that the company’s rapid growth will slow down as the pandemic dies down. However, the e-commerce narrative is not going away, and that means the long-term growth story for the stock is still in place. Wood seems to think so as SHOP stock makes up nearly 3% of the ARK Next Generation Internet (NYSEARCA:ARKW) portfolio. The consensus opinion of analysts is a hold, but the 12-month price target gives the stock nearly a 20% upside from current levels.
Shopify Inc, a commerce company, provides a commerce platform and services in Canada, the United States, the United Kingdom, Australia, Latin America, and internationally. The company’s platform provides merchants to run their business in various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, and access financing. Read More
Current Price: $1,227.30
Consensus Rating: Hold
Ratings Breakdown: 16 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $1,318.10 (7.4% Upside)
#6 – Intuitive Surgical (NASDAQ:ISRG)
Intuitive Surgical (NASDAQ:ISRG) is one of the holding in the ARK Autonomous Technology & Robotics Fund (NYSEARCA:ARKQ). Intuitive Surgical is the recognized leader in robotic surgery. The stock has climbed over 276% in the last five years. And for much of that time, except for the big dip the stock took at the onset of the pandemic, the stock’s trajectory has been bullish.
When the pandemic hit, hospitals had to postpone elective surgeries. But since last summer, those procedures are coming back on line and so is investor interest in ISRG stock. The company has a strong balance sheet that contains no debt and as of the company’s last earnings report showed $4.7 billion in cash. And the company has a business model that allows it to generate income from its customers even after they have invested in the company’s robotic surgical equipment.
Since its pandemic low of $367.75, the stock has climbed 98% and the company appears to be generating revenue and earnings that are near pre-pandemic levels. Analysts have a consensus hold rating on Intuitive Surgical, but recent price targets suggest the stock can go much higher.
About Intuitive Surgical
Intuitive Surgical, Inc, together with its subsidiaries, designs, develops, manufactures, and markets da Vinci surgical systems, and related instruments and accessories in the United States and internationally. The company’s da Vinci Surgical System include surgeon’s consoles, patient-side carts, 3-D HD vision systems, skills simulators, da Vinci Xi integrated table motions, and Firefly fluorescence imaging products that enable surgeons to perform various surgical procedures, including gynecologic, urologic, general, cardiothoracic, and head and neck surgical procedures. Read More
Current Price: $784.48
Consensus Rating: Hold
Ratings Breakdown: 11 Buy Ratings, 8 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $750.94 (4.3% Downside)
#7 – Regeneron Pharmaceuticals (NASDAQ:REGN)
When your most well-known case study involves a former United States President, you have something to work with. That’s the case with the last stock on our list, Regeneron Pharmaceuticals (NASDAQ:REGN). The company made a big name for itself when former president Donald Trump was administered its therapeutic antibody cocktail treatment for Covid-19.
But that’s not the only reason, and maybe not the primary reason, that Regeneron is part of the ARK Genomic Revolution (NYSEMKT:ARKG) portfolio. The company’s Covid-19 therapeutic was not its first commercial success. And as Wood is betting it won’t be its last.
REGN stock has given up most of the gains it made in the last 12 months and is trading down approximately 3% in 2021. But some of that is coming from investors turning their eyes away from biotechs as vaccines are becoming more plentiful. However, that’s not the opinion of analysts who still rate the stock as a buy with a price target that gives REGN an upside of over 30%.
About Regeneron Pharmaceuticals
Regeneron Pharmaceuticals, Inc discovers, invents, develops, manufactures, and commercializes medicines for treating various medical conditions worldwide. The company’s products include EYLEA injection to treat wet age-related macular degeneration and diabetic macular edema; myopic choroidal neovascularization; and diabetic retinopathy, as well as macular edema following retinal vein occlusion, including macular edema following central retinal vein occlusion and macular edema following branch retinal vein occlusion. Read More
Current Price: $475.17
Consensus Rating: Buy
Ratings Breakdown: 15 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $637.21 (34.1% Upside)
Now that you’ve seen the stocks on this list, the choice about whether to invest in them is up to you. The ARK family of funds is actively managed by Wood. This means she is constantly buying and selling to achieve a market-beating return for her investors.
Her unapologetic high risk/high reward strategy may not be appropriate for every investor. And it shouldn’t make up a significant portion of our portfolio.
But if it’s right for you, now is the time to buy. Nobody can say for sure how long this rally in equities will last. But with interest rates remaining at historic lows and more stimulus hitting the economy, it’s likely that stocks will be the place to be for investors seeking capital growth.
These seven stocks are just a sampling of the funds that are part of the ARK fund family. However, if you’re an investor who believes in betting on the jockey as much if not more than the horse, you could do worse than following Cathie Wood’s lead.
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