When famous investors act, everyone takes notice. We’ve seen that this past weekend with the annual Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) meeting; observers hang on Warren Buffett’s every word. For growth investors, however, Buffett isn’t the role model. Rather, Cathie Wood stocks are where the action is at. Wood is the leader of Ark Investments, a firm that has now launched a variety of successful exchange-traded funds (ETFs).
Her flagship ARK Innovation (NYSEARCA:ARKK) has crushed the market over the past five years. And now Ark has branched out. Now there is the ARK Genomic Revolution (BATS:ARKG), ARK Next Generation Internet (NYSEACRA:ARKW), ARK Autonomous Technology & Robotics (BATS:ARKQ) and ARK Fintech Innovation (NYSEARCA:ARKF), all of which focus on exciting growth sectors. Most recently, Wood launched the ARK Space Exploration (BATS:ARKX).
In total, across these six different ETFs, there are now 173 different Cathie Wood stocks that constitute these funds. Many of her favorite picks end up in multiple ETFs. For example, a company could focus on fintech and also be eligible for the internet fund. In any case, with so many different holdings, it’s worth drilling down on some of the leading picks.
Here are seven Cathie Wood stocks that look appealing at current price levels:
- Unity Software (NYSE:U)
- Spotify (NYSE:SPOT)
- Lockheed Martin (NYSE:LMT)
- TuSimple (NASDAQ:TSP)
- Berkeley Lights (NASDAQ:BLI)
- Thermo Fisher Scientific (NYSE:TMO)
- Virgin Galactic (NYSE:SPCE)
Cathie Wood Stocks: Unity Software (U)
Cathie’s ETFs That Own U Stock: ARKK, ARKW, ARKQ
Investors are looking to invest in the Metaverse. That is to say, a virtual universe that acts an alternate reality. A virtual world, Second Life, pioneered the space many years ago, but failed to reach mainstream adoption. With advances in computing power and social networking, however, it seems people are now ready for a full-blown mass market virtual reality universe.
So far, Roblox (NYSE:RBLX) has gained the most enthusiasm as a potential Metaverse investment. However, Roblox has two core limitations. The graphics in its games are unappealing, and its user base is primarily kids and teenagers. There’s a solid niche there, but Roblox would have to do a lot more to ever take off with adults.
Instead, consider Unity. The company makes a 3D software engine that makes it easy to develop video games. It’s platform-agnostic, working on everything from PCs and consoles to smartphones and even virtual/augmented reality. Unity estimates that it has 70% market share among the top mobile games right now. Meanwhile, it has the majority of market share in virtual reality as well.
Whatever immersive games end up taking off that are playable across multiple platforms, there’s a good chance that Unity will be the software driving it. Meanwhile, Unity gets a cut of royalties from game sales and in some cases even gets to sell in-game ads when developers use its software. As if that weren’t enough, Unity is also rolling out its graphics engine to serve in e-commerce, online realty, movie production and more.
Cathie’s ETFs That Own SPOT Stock: ARKW, ARKK
Spotify shares struck a bad note this past week. Following a downbeat earnings report, SPOT stock slumped more than 10%. User growth slowed down, particularly in emerging markets. That’s certainly not good. However, we’re seeing this with a lot of online services now. As the economy is reopening, people are spending less time stuck at home. It’s not shocking that a company like Spotify would see a slowdown in momentum following 2020’s huge tailwinds.
That said, there’s no need to blow one quarter out of proportion. Spotify is advancing on several key initiatives, such as podcasts and more ancillary revenue streams.
For example, Spotify has rolled out an advertising initiative for labels and artists where they can accept a lower royalty on their streams in exchange for wider exposure. Critics have long said Spotify will never generate strong profits because it is contractually obligated to pay out a large cut of revenues to the record labels. However, as Spotify continues to build its massive user base, it will gain more and more bargaining power.
Make no mistake, Spotify is still on an excellent trajectory regardless of this past quarter’s results.
Cathie Wood Stocks: Lockheed Martin (LMT)
Cathie’s ETFs That Own LMT Stock: ARKX, ARKQ
This one might come as a surprise. Why does a technology-focused investor own a defense company? There’s actually a great reason to follow Cathie Wood’s stock purchase here.
Presumably she has invested in LMT stock for the space element. Lockheed is a leader in satellite technology. In fact, it has built almost 800 spacecraft so far. Satellite technology is vital to all sorts of emerging technologies in energy, telecommunications, navigation and defense. With the push into additional space exploration, look for spending in the space sector to blast off in coming years.
In addition to Lockheed’s growing space division, there’s the core defense operations that throw off a ton of cash. In fact, LMT stock sells for less than 15x forward earnings and pays a juicy 2.7% dividend yield. That could offer the best of both worlds for investors wanting dynamic growth upside while owning a safe, highly profitable blue chip stock.
Cathie’s ETFs That Own TSP Stock: ARKK, ARKQ
If you want to follow a famous investor such as Cathie Wood, it’s worth watching her teams’ latest purchases. Often, you can get an edge buying before the general public becomes aware that a celebrity is involved in a stock.
This brings us to autonomous truck company TuSimple. It launched its initial public offering (IPO) just three weeks ago. Wood immediately started buying TSP stock for two of her ETFs on April 15.
TuSimple stands apart from the flood of electric vehicle (EV) stocks we’ve seen recently. The main appeal with TuSimple is that it is autonomous, rather than electric. If TuSimple’s technology works as advertised, it will allow trucking companies to complete journeys without a driver, saving a ton of labor costs. This is particularly attractive right now, given the historic shortage of truck drivers and rising cost of labor post-pandemic.
As is often the case with upstart auto companies, there are clear risks here. TuSimple still needs to demonstrate its long-haul autonomous truck actually doing a delivery on public roads. It anticipates doing that this year. Meanwhile, it doesn’t envision getting to significant revenues until 2025. So the usual disclaimers around early stage companies apply. However, TuSimple already has an $8 billion market capitalization and has drawn Cathie Wood’s interest. Thus, it may be worth looking at today.
Cathie Wood Stocks: Berkeley Lights (BLI)
Cathie’s ETFs That Own BLI Stock: ARKK, ARKG
Berkeley Lights provides cell research services to customers such as pharmaceutical and biotechnology companies. It launched its IPO last year and was initially a hot property, with shares more than doubling. However, BLI stock gave back most of its gains, with the coronavirus pandemic slowing down some spending on laboratory equipment and supplies.
The big correction looks like a buying opportunity. Berkeley Lights’ core technology allows researches to do cell assays in a matter of hours which previously would have taken weeks. In fact, antibodies identified by Berkeley Lights’ Beacon system ended up going into an Astrazeneca (NASDAQ:AZN) Covid-19 therapeutic drug. That gives a practical real-world example of how combining lab work with next-generation software can speed up the biotech research process.
BLI stock still looks expensive based on trailing results, even after its sharp drop. That said, investors such as Wood are looking at the next five or ten years for a company like Berkeley Lights. Over time, more biotech companies and university labs should adopt Berkeley Lights’ technology. Once they do, it sets up a growing recurring stream of revenues for the company.
Over time, if Berkeley Lights get sufficient adoption, it will likely become a buyout target for one of the larger life sciences companies.
Thermo Fisher Scientific (TMO)
Cathie’s ETFs That Own TMO Stock: ARKG
That leads into Thermo Fisher. It is one of the world’s leaders in life sciences. It spans analytical instruments, lab products and services and specialty diagnostics, among its lines of business. In short, if you want to do any sort of clinical research or academic study in biotech, there’s a good chance you’ll need to have equipment from Thermo Fisher.
The company enjoyed an historic boom over the past year. Companies needed to run way more tests and research studies to deal with Covid-19. This led to incredible results. This past quarter, Thermo Fisher’s earnings more than doubled year over year with top-line revenues up 59%. Those are shocking numbers for a company that is already a mega-cap.
However, TMO stock has cooled off over the past months. People are rightly considering a potential post-Covid slump as testing activity returns to more normal levels. TMO stock is only trading for 21x earnings now. Clearly, investors are worried about much of its Covid earnings boom disappearing. However, analysts only see earnings slipping about 10% in 2022 and then Thermo Fisher will return to growth in 2023.
At the end of the day, any sort of genetic revolution that unlocks futuristic medical therapies will need a ton more research and testing. Thermo Fisher is poised to capture a large chunk of that increased spending.
Cathie Wood Stocks: Virgin Galactic (SPCE)
Cathie’s ETFs That Own SPCE Stock: ARKX, ARKQ
Virgin Galactic stock has crash-landed in recent weeks. After soaring to $60 earlier this year, shares have thudded back to just $22 now. That’s par for the course with many of these SPAC offerings with untested business models. They soar one day and collapse seemingly the next.
Skeptics can easily highlight how there are still safety concerns around Virgin Galactic’s space vehicles. And also how there is no certainty that the commercial market for space trips will be large enough to support Virgin Galactic’s intended business model. Those are valid questions.
That said, Virgin Galactic has made good moves since going public. For example, bringing in CEO Michael Colglazier from Disney (NYSE:DIS). That’s as clear a sign as any that the company intends to build a world-class tourism business. It’s way too early to say whether Virgin Galactic is going to succeed or not. But the story is incredibly appealing and could easily captivate investors once again. With shares on a sharp downswing, it makes sense that Wood has been buying more SPCE stock in recent weeks.
On the date of publication, Ian Bezek held long positions in BLI, U, SPOT, BRK.B and LMT stock.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.