Cathie Wood Has 18% of Her Money in These 3 Growth Stocks

Cathie Wood Has 18% of Her Money in These 3 Growth Stocks

During tricky market conditions, it can be helpful to follow professional investors who are focused on the long term.

Cathie Wood is the head of Ark Investment Management, a firm known for making big, long-term bets on some of the most innovative technology companies. It runs eight exchange-traded funds (ETFs) focused on different areas of the tech sector from robotics to space exploration, and they hold a total of 34 different stocks.

A panel of contributors have selected three of those stocks that truly stand out, and together, those stocks account for 18.2% of Ark’s entire holding. Here’s why investors might want to follow Cathie Wood’s lead by owning Tesla ( TSLA 3.60%), Roku ( ROKU 3.29%), and Zoom Video Communications ( ZM 2.98%). The future of green cars, and green energy

Anthony Di Pizio (Tesla): Cathie Wood owns many great companies, but perhaps none have as much long-term potential as Tesla. The company is already the global leader in the electric vehicle industry, and while that business is likely to drive the company’s revenue for the foreseeable future, Tesla is also quietly building a presence in other high-impact segments.

By 2024, the company expects to have launched its robotaxi, which will run on fully autonomous, self-driving technology. It could be the future of the mobility industry, and one estimate suggests that opportunity could be worth over $2.1 trillion per year by 2030. Wood’s Ark Investment firm is incredibly enthusiastic about this part of Tesla’s business, predicting it could make up 60% of the company’s value by 2026.

But that’s not all. Tesla also has a growing residential solar and battery storage segment that has already achieved great things. Since 2012, the company has deployed enough solar to account for all of the energy its cars and factories have chewed up over that period, combined.

The company is also currently ramping up toward an annual production capacity of two million electric vehicles thanks to its brand new gigafactories in Austin and Berlin. These facilities are expected to rapidly scale, and analysts predict Tesla could generate $119 billion in revenue in 2023, marking the first time the metric enters triple digits.

But CEO Elon Musk has his eye on the long term, which could involve 10 to 12 additional gigafactories by the end of the current decade, capable of making 20 million cars per year. It’s little wonder Wood and her firm are so bullish on Tesla — in fact, Ark thinks the stock could soar 437% to $1,533 per share between now and 2026. This bargain-bin stock still dominates streaming

Jamie Louko (Roku): As of Sept. 7, Roku is one of the largest holdings across all of Ark Invest’s ETFs. Wood has been actively adding to her position in the stock over the past few months, too. Since July 29, Ark Invest has bought more than 470,000 shares of Roku stock, likely because it trades at just around three times sales — close to its lowest valuation ever since going public.

The company is cheap for a reason, however. Roku struggled in its second quarter, posting just 18% year-over-year revenue growth. Why? Businesses are cutting back on spending as budgets tighten, and advertising is an easy place to do so. What’s even more disappointing is that the company sees continued headwinds ahead for the rest of the year: In the second quarter, the company gave third-quarter guidance that projects just 3% revenue growth on a year-over-year basis.

That said, Cathie Wood and Ark Invest look for long-term opportunities . On that front, Roku still looks exciting. Streaming continues to gain steam with U.S. consumers aged 18 to 49 spending 50% of their TV time streaming last quarter, up from 40% in 2020. While consumers spend half of their time streaming, however, only 22% of TV ad budgets go toward it. Considering Roku is the largest streaming platform in terms of hours streamed in the U.S., Canada, and Mexico, the company has the potential to capitalize on this opportunity as advertisers ultimately shift more of their budgets toward streaming.

The most prominent risk to Roku is that it loses its leadership status and thus its spot as the preferred platform for advertisers to buy ad inventory. The company faces stiff competition, but Roku doesn’t see any signs of losing its leadership position . The company has more than 63 million active accounts, which jumped 14% year over year, and the number of hours streamed on its platform increased steadily to 20.7 billion last quarter.

While the short term […]

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