Many of you are familiar with Cathie Wood, the famed stock-picker and founder of ARK Invest. Who focuses on investing in disruptive tech stocks with enormous upside potential. Indeed, she’s so famous that the stocks she buys in her funds are often labeled as “Cathie Wood stocks”.
Stocks like Tesla (NASDAQ:TSLA), Coinbase (NASDAQ:COIN), Teladoc (NYSE:TDOC), Square (NYSE:SQ) and Roku (NASDAQ :ROKU).
While Wood and ARK Invest’s performance has been poor in recent months. The Innovation ETF has still done quite well overall. Since its inception in 2014, the fund has provided a 250% return, far outpacing the broad market. ARK Invest and Wood have a strong track record, which is why it might benefit investors to see what stocks she’s buying during this decline.
UiPath
UiPath is one of the largest holdings in Cathie Wood’s Ark Invest exchange-traded funds. PATH stock is owned by several Ark’s ETFs that cover different themes such as innovation, robotics, and the next generation of the internet.
This artificial intelligence (AI) stock, down 22% year to date, now sports a valuation of 19 times trailing revenue, versus the 60 times it debuted last year. With the lower valuation, Wood has purchased 1.38 million shares in 2022 alone.
Ark’s flagship Ark Innovation ETF (NYSEARCA: ARKK) has lost more than half its value since it peaked last year. Meanwhile, Ark’s clients are withdrawing a great deal of money from its funds., forcing the company to sell some of its holdings to provide cash to these clients.
UiPath is rapidly becoming a mission-critical service for its big-name customers, including NASA and Alphabet. As a market leader that’s deeply integrated with thousands of customers already, its future looks bright. With shares trading near their all-time low, Cathie Wood took advantage of a potential bargain, and you might want to consider doing the same.
Coinbase Global
A fun fact about Coinbase is that it wasn’t even publicly traded a year ago. Now it has become ARK Invest’s third-largest investment across all of its ETFs. Coinbase is the leading cryptocurrency exchange, and how well it’s doing depends largely on where you draw the starting line.
Revenue over the past year has been phenomenal. Coinbase posted a 330% year-over-year burst on the top line for its latest quarter, and net income soared fivefold.
It’s a different story if you go quarter over the quarter. The $1.2 billion it generated in revenue for the third quarter was well below the $2 billion it delivered in its record second-quarter performance. Monthly transacting users slipped from an average of 8.8 million in the quarter ending in June to 7.4 million three months later.
Crypto has gone mainstream, but obviously, Coinbase will be at its best when the market is ascending and trading activity is following suit. The company is very profitable, and the high-margin business is trading for less than 18 times trailing earnings.
The problem is that last year’s profit was inflated by positive one-time items and its monster showing in the second quarter. The crypto exchange is trading at 34 times forward earnings. Coinbase is still a leader in an emerging industry. It deserves a market premium.
