7 Growth Stocks Cathie Wood Is Bullish on Right Now

7 Growth Stocks Cathie Wood Is Bullish on Right Now

Source: Shutterstock Whether or not you are a fan of growth stocks, chances are you are aware of Catherine “Cathie” Wood. The founder and CEO of exchange-traded fund manager ARK Invest , Wood has seen a stunning rise from bit player to Wall Street star, thanks to the strong performance of her flagship ETFs, ARK Innovation ETF (NYSEARCA: ARKK ) and ARK Next Generation Internet ETF (NYSEARCA: ARKW ).

In 2020, ARKK posted returns of 152.5%. ARKW delivered an even higher rate of return in 2020, climbing in value by 157.07%. Admittedly though, performance has cooled considerably in 2021. With many of her top holdings still down from their respective February highs, ARKK has only returned 5.05% year-to-date. Since the start of 2021, ARKW has posted similar sub-par returns (5.27%).

Wood has also gotten a lot of notoriety for her extremely bullish predictions for the future price of Tesla (NASDAQ: TSLA ) stock. Her price target may have been laughed off by some in 2018. But in January 2021, shares in the EV maker hit her $4,000 ($800 post-split) target . Even as ARK has trimmed its Tesla holdings , the growth investing maven remains bullish. She now has a $3,000 price target on the stock, more than four times where it trades today.

That said, instead of following her lead into Tesla, you may find more opportunity diving into the names ARK Invest has been bullish on. Per the firm’s most recent 13F filings with the Securities and Exchange Commission (SEC), Woods and team hold big positions in the following seven growth stocks: Growth Stocks: DraftKings (DKNG)

Ahead of the fall football season , many investors dived into DraftKings stock. But ARK Invest was diving back even earlier. Across its ETFs, the firm increased its holdings in the online sportsbook operator by 211% in the June quarter.

This accumulation has continued , as seen from ARK’s purchase of another $60 million worth of DKNG stock across late August. So, should you follow Woods’ lead, and add it to your personal portfolio?

Yes and no. On one hand, the “future of gambling” play’s continued high levels of revenue growth may enable it to maintain, or even grow, its current premium valuation. On the other hand, if underlying issues become more of a concern in the eyes of investors? Shares may be at risk of seeing downward pressure.

That is, it could experience some multiple compression if markets start to sour on growth stocks. It could also experience a pullback, if concerns about heavy competition from rivals like Caesars Entertainment (NASDAQ: CZR ), MGM Resorts International (NYSE: MGM ) and Penn National Gaming (NASDAQ: PENN ) increase. On top of either risk factor, investors could also grow impatient about its long road to reaching profitability. Trading for around $60 per share today, waiting until it dips again to buy may be the best move. UiPath (PATH)

Starting in April , Wood’s funds began to build up a position in UiPath, an automation software play, which went public that same month . It’s now a top 10 holding in ARK Autonomous Technology & Robotics ETF (BATS: ARKQ ), making up around 5.15% of its overall portfolio .

PATH stock started off strong in the month following its debut, soaring from its $56 per share initial public offering price, to as much as $90 per share. But since June, it’s fallen back to where it started. The reason? Concerns about its valuation have outweighed the fact it’s been delivering results in line with expectations.

Even after its slide from $90 back to around $56 per share, UiPath sells at an extremely high valuation, with its forward price-to-earnings, or forward P/E, ratio of around 3,502. It also sells for around 32.8x its estimated sales for the fiscal year ending January 2022.

As a Seeking Alpha commentator recently broke down the situation, it’s debatable whether shares will deliver strong returns in the coming years, or if its likely rate of return in the years ahead isn’t worth the risk . Assuming, of course, it continues to grow its sales/earnings in-line with projections.

Only time will tell whether Wood is on the money here, or if the valuation skeptics will prevail. With this in mind, those bullish on it as a play on the rise of automation may want to wait for more pessimism to sink it lower before buying. Growth Stocks: Palantir Technologies (PLTR)

Well-known as a favorite of the Reddit stock trading community, big data powerhouse Palantir Technologies is a Cathie Woods […]

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