Last week, Cathie Wood made headlines after addressing an open letter to the Federal Reserve. The exchange-traded fund (ETF) manager says that the agency should focus on deflationary forces instead of inflationary ones, citing falling commodity prices as a leading indicator. Commodities like lumber, silver and iron ore have all fallen at least 30% from their respective peaks Meanwhile, Wood notes that the Fed seems to be focusing on two lagging indicators — employment and headline inflation — as justification for its rate hikes.
On top of this, the Ark Invest CEO contends that manufacturers and retailers have been dealing with an influx of inventory. For example, Nike (NYSE:NKE) reported that its global inventories grew by 44.2% while its sales only grew by 3.6%. Others companies like Walmart (NYSE:WMT) and Target (NYSE:TGT) have experienced similar fates.
In light of interest rates being up 13-fold in the last six months, Cathie Wood concludes that the Fed has put the U.S. and the global economy at risk for a deflationary bust.
With that in mind, let’s take a look at the top five stocks that Cathie Wood has purchased this week.
5 Top Stocks Cathie Wood Is Buying This Week
1. Roblox (RBLX)
Shares of Roblox (NYSE:RBLX) stock are soaring higher today after the video game company announced its September metrics. Perhaps the most important metric, daily active users (DAUs), soared 23% year-over-year (YOY) to 57.8 million. Hours of engagement totaled 4 billion as well, while estimated bookings were between $212 million and $219 million, up between 11% and 15% YOY.
Still, Roblox hasn’t been able to escape the effects of inflation. The company estimated that foreign currency fluctuations contributed to a 6% YOY reduction in growth for September bookings. If bookings were measured on a constant currency basis, estimated bookings would have increased between 17% and 21% YOY.
On Oct. 7, the ARK Innovation ETF (NYSEARCA:ARKK) and the ARK Next Generation Internet ETF (NYSEARCA:ARKW) purchased a combined 245,705 shares of RBLX stock. After the purchases, Roblox is now the 17th largest holding among all ARK ETFs.
2. Rocket Lab (RKLB)
Last week, Rocket Lab (NASDAQ:RKLB) announced that it surpassed its annual launch record with the 31st launch of its Electron rocket, bringing its total YTD launch count to eight. Furthermore, the aerospace manufacturer has now “successfully launched a mission every month since April 2022.” The company remains on track to launch a mission every month until the end of the year.
That’s not all, though. Rocket Lab was also selected by NASA’s Jet Propulsion Laboratory (JPL) to supply it with solar panels as part of the Cooperative Autonomous Distributed Robotic Explorers (CADRE) program. The solar panels will power NASA’s small mobile robots and will use Rocket’s inverted metamorphic multi-junction (IMM) solar cells.
From Oct. 10 to Oct. 11, the ARK Space Exploration & Innovation ETF (BATS:ARKX) purchased 199,525 shares of RKLB stock. After the purchase, Ark now owns a total of 1.59 million shares purchased at a cost basis of $4.27.
3. Adobe (ADBE)
Adobe (NASDAQ:ADBE) announced that it would acquire Figma for $20 billion on Sept. 15, leading to a massive drop in ADBE stock. Since Sept. 14, the software company has lost over 20% of its market capitalization. However, this drop represented a dip buying opportunity for Cathie Wood. Since the acquisition announcement, she has purchased ADBE stock on two separate occasions, once on Sept. 19 and the other more recently on Oct. 10. Before that, the last time Ark purchased shares was on April 27.
Despite the decline, CEO Shantanu Narayen believes Adobe made the right move:
“We’re confident that if you look at this in the long run, it’s going to be a big value for their shareholders and our shareholders as well.”
Adobe is forecast to add $200 million in net new annual recurring revenue this year. It’s also expected to double that figure to over $400 million next year. Furthermore, Figma has industry leading gross margins of about 90%.
On Oct. 10, ARKW scooped up 23,605 shares of ADBE stock. ARKW is the only ARK ETF that owns the company and has a total share count of about 46,000 shares.
4. UiPath (PATH)
Today, UiPath (NYSE:PATH) was named as a leader in Everest Group’s Robotic Process Automation Products PEAK Matrix Assessment for 2022 for the sixth consecutive year. The robotics process automation (RPA) company also received recognition as a “Star Performer” in the technology provider landscape.
Everest Group Vice President Amardeep Modi added the following:
“Strong YoY in its global RPA business, focus on customer success & enablement, and continuous investments in M&As & strategic alliances for enabling a holistic intelligent automation solution, are some of the key factors that contributed to its position.”
Meanwhile, Needham analyst Scott Berg gave his opinion on PATH stock in September after the company hosted its analyst day. In the spotlight was revenue guidance for fiscal 2024, which is expected to grow around 18% YOY. However, the consensus for fiscal 2024 growth was for around 23%. Berg has a price price target of $20 on PATH, which would imply upside of more than 60% from current prices.
On Oct. 10, ARKK acquired 83,082 shares of UiPath. After the purchase, PATH is now the fourth-largest holding among all ARK ETFs.
5. Ginkgo Bioworks (DNA)
Ginkgo Bioworks (NYSE:DNA) made headlines last week after announcing a collaboration with Merck (NYSE:MRK). The collaboration will see the cell programming company create four enzyme biocatalysts for Merck’s active pharmaceutical ingredient (API) process. Ginkgo will receive an upfront research and development fee and is also on the book for success-based research and development milestone awards. On top of that, the company could earn further payments of up to $144 million for achieving “biocatalysis targets.”
Ginkgo CEO Jason Kelly noted the following about the collaboration:
“Ginkgo’s platform model enables us to identify improved enzymes and develop powerful fungal strains and fermentation processes for enzyme manufacturing, empowering downstream API production for our customers.”
On Oct. 10, ARKK and the ARK Genomic Revolution ETF (BATS:ARKG) purchased a combined 260,674 shares of DNA stock. Following the transactions, Ark Invest now owns a total of 117 million shares.
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On the date of publication, Eddie Pan did not hold (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.
