Since the early days of the pandemic, Wall Street has been paying attention to Cathie Wood stocks, or shares that have been included in exchange-traded funds (ETFs) overseen by Cathie Wood of ARK Investment Management. Therefore, today’s article will introduce three of her best and worst picks for the year.
ARK Investment management currently has nine funds, focusing on themes that Cathie Wood believes have great growth potential in the coming years. These ETFs include:
- ARK Autonomous Technology & Robotics ETF (NYSEARCA:ARKQ) — up 0.94% (or flat) year-to-date (YTD);
- ARK Fintech Innovation ETF (NYSEARCA:ARKF) — down 17.72% YTD;
- ARK Genomic Revolution ETF (BATS:ARKG) — down 34.33% YTD;
- ARK Innovation ETF (NYSEARCA:ARKK) — down 24.02% YTD;
- ARK Israel Innovative Technology ETF (BATS:IZRL) — down 3.87% YTD;
- ARK Next Generation Internet ETF (NYSEARCA:ARKW) — down 18.04% YTD;
- ARK Space Exploration & Innovation ETF (BATS:ARKX) — down 7.14% since inception in March;
- ARK Transparency ETF (BATS:CTRU) — down 1.38% since inception in early December;
- The 3D Printing ETF (BATS:PRNT) — up 10.06% YTD.
As these metrics highlight, 2021 has not been a good year for investors in most ARK funds. Wall Street has begun debating whether a large number of Cathie Wood stocks might be overvalued.
In fact, there is now an ETF, namely the Tuttle Capital Short Innovation ETF (NASDAQ:SARK), which bets against the ARK Innovation ETF. SARK is a short ETF that uses derivative contracts to achieve the daily inverse performance of the ARKK fund. Since inception in early November, SARK has returned about 15%.
With that information, we’ll review three Cathie Wood stocks. Two of them have done well during the year, whereas the other one has not. They include (in alphabetical order):
Cathie Wood Stocks: Coinbase Global (COIN)
Recent metrics by Allied Market Research highlights, “The global cryptocurrency market size was valued at $1.49 billion in 2020, and is projected to reach $4.94 billion by 2030.” Such an increase would mean a compound annual growth rate (CAGR) of well over 12.8%.
2021 will be remembered as the year when many cryptocurrencies saw record highs and caught the attention of retail investors worldwide. In fact, Cathie Wood is a big fan of especially Bitcoin (CCC:BTC-USD), and has a long-term price target of $500,000 for BTC.
Earlier in the year, the crypto hysteria was crowned when the cryptocurrency exchange platform Coinbase Global became a publicly-traded company via a direct listing. COIN stock started trading in mid-April at an opening price of $381. The same day, it hit an intraday record high of $429.54. But, since then, sellers have come in.
As a result, the stock currently hovers around $254.50 territory, down a little over 20% since the all-time high (ATH). Shares are trading at 35.2 times forward earnings and 9.2 times trailing sales. The 12-month median price forecast for COIN stock is $402.
Coinbase is considered a crypto-adjacent name. In other words, those investors who do not want to buy digital assets directly could consider investing in COIN stock to participate in the growth in the crypto space.
The digital-asset marketplace is expected to release fourth-quarter earnings in early February. Those investors who can handle the short-term volatility in COIN could consider investing around $230.
Canada-based Shopify has been an excellent choice for those who have bet on the growth of e-commerce in the past several years. In the U.S., “Consumers spent more than $1 in $6 online in the third quarter.”
Shopify’s market share currently stands close to 30% stateside. Recent research shows, between 2021 and 2028, the global e-commerce market is forecast to grow at a CAGR of 18.7%. Therefore, we can expect the Shopify platform to capture a significant part of increased revenue worldwide.
SHOP stock currently hovers above the $1,356 territory, up about 23% year-to-date (YTD). In November, it hit an ATH of $1,762.92. However, since then, it has lost about 21%.
Shares are now trading at 277.8 times forward earnings and 43.9 times trailing sales. Meanwhile, the 12-month median price forecast for Shopify stock stands at $1,660.
Management is expected to release Shopify’s fourth-quarter financials in late January. A potential decline toward the $1,300 level would improve the margin of safety.
Cathie Wood Stocks: Tesla (TSLA)
Covid-19 has put several investment themes in the limelight, including the transition to alternative energy sources and decarbonization efforts. Most analysts concur that the past several quarters have been a game changer for global electric vehicle (EV) sales, which “increased by 160% in the first half of 2021 from a year earlier, to 2.6 million units, representing 26% of new sales in the global automotive market.”
Among the top 10 fastest-selling EVs globally, we see two models by Tesla: Model 3 and Model Y. And Cathie Wood has been one of the most vocal Tesla bulls on the street.
TSLA stock currently hovers above the $1,175 territory, up about 54% YTD. In early November, it hit a record high of $1,243.49. Like our two other stocks, COIN and SHOP has seen a record high while TSLA stock has lost over 12% of its value.
Shares are currently trading at 121.95 times forward earnings and 24.67 times trailing sales. The 12-month median price forecast for Tesla stock is $924.50. Put another way, Wall Street believes most of the good news has already been factored into the share price.
Management will release Q4 financials in the second half of January. Interested reads might want to analyze the metrics before hitting the ‘buy’ button.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.