Top 5 stocks Cathie Wood is buying now
At Cathie Wood’s Ark Invest has performed well recently, with shares of its flagship exchange-traded fund (ETF), the ARK Innovation ETF (NYSEMKT:ARKK), up more than 15% in the past month. The performance was driven by the publication of the consumer price index (CPI) for July report. The report revealed that inflation rose 0% month-on-month (MOM) and 8.5% year-on-year (YOY). Meanwhile, economists were expecting an 8.7% annual increase and a 0.2% monthly increase.
Wood expects further declines in inflation. The Arche founder explained, “We will be talking about deflation as a bigger risk over the next three to six months. Innovation drives deflation. One metric that has been very telling.. is long-term Treasury yields… The bond market expects growth to surprise from the bottom.
She cited the difficulty of the 10-year Treasury yield staying above 3% as a sign that current inflation rates are unsustainable. Moreover, she thinks that the drop in gas prices is a sign that prices could come down.
So what did Ark buy?
5 Cathie Wood Stocks Ark is buying now
1. Invites (NVTA)
Guests (NYSE:NVTA) has seen volatile price action since the release of its second quarter results on Aug. 9. The following day, NVTA shares closed up a stunning 238%. The genetic testing company reported revenue of $136.6 million, up more than 17% year-over-year. But it is still below estimates by just 0.62%. On the other hand, earnings per share recorded a loss of 68 cents, beating the estimate of a loss of 74 cents.
The company’s earnings report did not appear substantial enough to sustain a 238% gain, prompting investors to speculate a short squeeze. As of July 31, 23.1% of the public float was sold short, which equates to a monetary volume of $98.38 million. The high short interest was significant enough to cause a short squeeze, associated with investors pushing prices higher.
Wood said he purchased NVTA the day before its earnings report. On August 8, ARKK recovered 186,884 shareswhile the ARK Genomic Revolution ETF (BATS:ARKG) acquired 626,059 shares. After purchases, Invitee is now the 45th largest holding among all ARK ETFs out of a total of 51.
2. Teladoc (TDOC)
Ark has now purchased shares of Teladoc (NYSE:TDOC) for three consecutive weeks. From August 8 to August 11, 445,481 shares were purchased through four ARK ETFs, including – oddly enough – the ARK Fintech Innovation ETF (NYSEMKT:ARKF). After the purchases, Ark holds a total of 30.6 million shares, making it the first shareholder by a wide margin.
Shares of TDOC have fallen more than 50% since the start of the year, providing a discount opportunity for Ark. August 11, D.A. Davidson initiated company coverage with a $45 price target. Analyst Robert Simmons called the company a leader in telehealth with a variety of offerings. Shares have fallen more than 85% from the $308 high, although Simmons believes this is an “overcorrection”. The analyst adds that the current rate of growth in revenue and free cash flow margin should provide a significant upside.
On August 10, Ark bought 44,048 shares of Roblox (NYSE:RBLX) through two of its ETFs. This was Ark’s first purchase of RBLX since June 9. Ark bought shares after the metaverse company reported Q2 results on August 9, sending the stock down more than 10%. Revenue reached $639.9 million, below analysts’ estimate of $644.4 million. Earnings per share also fell short, posting a loss of 30 cents against a forecast loss of 21 cents. The EPS figure is equivalent to a net loss of $176.4 million.
Meanwhile, average daily active users (DAUs) reached 52.2 million, which is below analysts’ estimate of around one million users. During the first quarter, the company reported 54.1 million average DAUs. Despite misfires on several metrics, RBLX stock has since recouped all of the losses attributed to its earnings report, leading investors to believe the worst may have already been priced in.
Wood has now purchased shares of Brandforged (NYSE:MKFG) for two consecutive weeks, even after the company reported its earnings August 11. The company operates as a supplier of 3D printing and materials.
Revenue rose 19% year-on-year to $24.2 million, while net profit reached $4.1 million from a net loss of $11.1 million a year ago. On the other hand, the gross margin fell to 53% against 58% a year ago. CEO Shai Terem added:
“We continue to make great strides in executing our strategy thanks to the tremendous efforts of our talented team. We are very confident in our long-term opportunity to expand our leadership position in distributed manufacturing as our portfolio grows. of products develops and evolves.
From August 8 to August 12, two ARK ETFs bought 575,458 shares by MKFG. The biggest buying during this period came after the August 12 earnings, when 396,856 shares were bought in a single day. In August, Ark bought MKFG 18 times.
5. Fate therapy (SPELL)
From August 11 to 12, two ARK ETFs bought 632,542 shares of fate therapy (NASDAQ:SPELL). Interestingly enough, it looks like Wood may have changed his mind quickly, as ARKK sold 307,711 shares on August 8. The recent purchases were the company’s first FATE purchases since February 25.
Fate operates as a clinical-stage biotechnology company that uses cellular immunotherapies to treat patients with cancer and immune disorders. During the second quarter, the company reported sales of $18.5 million, up 38% year-on-year. Fate also announced an expanded collaboration with ono pharmaceutical (OTCMKTS:OPHLY) to advance its second solid tumor program.
Even though the business is still not profitable, it still has seven proprietary cell therapy candidates in its product portfolio. Wood’s recent purchases may provide further conviction about the potential of Fate’s pipeline.
At the date of publication, Eddie Pan held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.