As founder, CEO and CIO of investment management firm ARK Invest, Cathie Wood became famous for betting on Tesla’s meteoric rise, and being proven right.
Her track record through 2020 was virtually unparalleled – her flagship ARKK fund was up 156.6% for the year. Betting on high growth stocks that were at the forefront of disruptive innovation proved to be a golden-ticket strategy during the pandemic.
But the high growth bubble burst in November 2021, and since then Cathie’s ARK funds have been in multi-month downtrends. With the air deflated out of the high growth balloon, now might be the ideal time to scoop up shares of high potential stocks. Cathie seems to think so, and here are 3 stocks she’s been snapping up for her funds.
Can Blade Air Mobility Soar 46%?
While helicopters and seaplanes might not be the first place retail investors would think to look for “the next Tesla” stock, Cathie Wood thinks differently. She has placed a bet on Blade Air Mobility — an urban air mobility platform that essentially operates like Uber for airfare.
Blade Air Mobility provides users with the opportunity to find seats on flights across the northeast and west coast as well as the ability to schedule private flights, helicopters, or other forms of air travel.
The app has enjoyed great success with the ultra-wealthy needing transportation to and from big events, which makes it an attractive candidate for slow but steady growth in the months and years ahead.
Analysts have pegged fair value at $13.80, which is a 46% premium to where the share price currently sits at the time of research.
Roku Has 21.9% Upside
Given how streaming has mushroomed over the past few years, it’s no surprise to see ARK Invest placed a serious stake in Roku.
With over 60 million accounts at the start of 2022, Roku’s free-to-use platform is a huge draw in the midst of the so-called streaming wars — especially as rivals like Netflix and Amazon continue to increase the prices for their respective streaming services.
Looking at the company’s financials, it’s even clearer to see why Wood would find a lot of hope in Roku. A discounted cash flow forecast analysis reveals an intrinsic price per share of $135.78 per share, representing upside potential of 21.9%. Analysts are even more optimistic, they peg fair value at $180.83, which would translate to a rise of 61.9%.
Will UiPath Spike 17.9%?
Even more unexpected than Blade Air Mobility is Cathie Wood’s bet on a company called UiPath: a software and robotics company with clients the world over.
Trusted by companies across the globe, UiPath specializes in the creation of robotic process automation (RPA) software — an industry that many expect to explode over the coming years. After going public only one year ago, it seems like ARK Invest wanted to give the company a handful of quarters to prove itself before going all-in.
UiPath’s financials make it easy to see why Wood might trust the company with her investment: currently trading for $20 a share, analysts expect to see the company’s stock price soar ever-upward over the next twelve months. Some have even gone as far as to forecast UiPath stock could hit nearly $60 a share twelve months from now. If these forecasts aren’t reason enough, the company’s net retention rate is a very attractive 145%.
50% Annualized Growth Over Next 5 Years
From an air travel app to a streaming service to a new RPA developer, Cathie Wood and ARK Invest have identified a common theme in all 3 bets that is consistent with her investing thesis: disruptive innovation.
She is known best for standing her ground when high growth stocks pullback, and it will be interesting to see if she stays true to her investment theses with these three recent ARK Invest purchases. She has claimed her funds are slated for 50% annualized growth over the next 5 years.
Even with valid causes for concern — such as Blade Air Mobility’s hyperspecific target audience, Roku’s potential supply chain issues on the horizon, and UiPath’s revenue hiccups — Cathie Wood’s support is a signal that longer term fundamentals should weather temporary storms.