It wasn’t too long ago that investing guru Cathie Wood was the hottest money manager in the game. Her ARK Invest exchange-traded funds offered investors blistering returns on their money. Finding Cathie Wood stocks to buy and hold was a straightforward decision for investors.
At one point she more than doubled their money in a year. Her funds were pulling in more new money than virtually any other ETF on the market. But the tech downturn showed just how vulnerable some of the big bets she made truly were.
For example, the Ark Innovation ETF (NYSE:ARKK) generated 152% returns in 2020, but tumbled 23% in 2021, and crashed almost 67% in 2022. This year the ETF is rallying again. Ark Innovation is up 40% so far, which is .
Because not even Warren Buffett has a winning year every year, it’s still worthwhile keeping an eye on Wood’s investments. She remains a very smart investor. Although I don’t recommend blindly following her lead (or even Buffett’s), riding her coattails for investment ideas is a good first step.
Always do your own diligence, but these seven Cathie Wood stocks to buy and hold look like winning bets for the long haul.
Shares of financial services leader Block (NASDAQ:SQ) leveled out after sinking on disappointing earnings results. Well, if you consider beating on top and bottom line estimates “disappointing.” The problem is Block continues to report losses and its Afterpay buy now-pay later unit continues to drag on performance.
The stock is down 35% from recent highs and off 7% year to date. That represents opportunity for investors.
Certainly the payments sector is becoming more crowded. Apple‘s (NASDAQ:AAPL) broad move to capture more share is causing others, including PayPal (NASDAQ:PYPL), to lag. Yet Block’s CashApp is a force to be reckoned with on its own.
What makes this one of the Cathie Wood stocks to buy and hold is that its mobile payments service processed nearly $500 million in volume on an annualized basis last quarter. The number of monthly active users is also expanding. The app now has 54 million MAUs, 15% greater than the year ago period.
Because of CashApp, Block raised its forecast for adjusted profits for the full year. It now expects adjusted EBITDA of $1.5 billion, up from prior guidance of $1.36 billion.
Block’s stock is not cheap by traditional measures. It trades at 24 times earning estimates and over 100 times free cash flow. Yet there remains big growth potential as it moves overseas. Gross profits remain robust. That gives Block the tools to rein in costs further and begin producing GAAP profits.
Television streaming platform Roku (NASDAQ:ROKU) is heading in the opposite direction of Block. Its stock doubled since the start of the year.
No longer held back by slowing sales of smart TVs, and with the Federal Reserve likely to at least pause its fiscal tightening policies, Roku has a bright future, which is why it’s one of the Cathie Wood stocks to buy and hold.
Consumers continue to decouple from cable in favor of streaming. Nielsen data indicates linear TV viewership dropped below 50% for the first time ever in July. Just 49.6% of broadcast and cable TV represented total usages for the month. Conversely, streaming accounted for a record high 38.7%.
Consumption is increasingly being dictated by viewer demand for content when and where they want it. The broken model of broadcast and cable setting the terms is over.
Roku continues to add variety. The free, ad-supported television platform (FOX)(NASDAQ:FOX-A) and CBS. It’s the first time a FAST service ) recently added 30 local channels from Fox (NASDAQ:offered network-owned stations from each of the big four broadcasters.
Roku’s growing user base also gives it leverage with advertisers. The streamer’s popular programmatic ad buying service gives ad buyers greater choice in how they place ads. Its expanding user base also increases its average revenue per user. Both point to a solid future of growth.
The market is finding it difficult to hold graphics chip maker Nvidia (NASDAQ:NVDA) back. Its stock has more than tripled in 2023 and doesn’t appear to be slowing. That’s because its business continues to explore new avenues for expansion and the metaverse could be one of the biggest drivers to come along in a long time.
Applications to make the metaverse a reality require significant and complex computing power. Nvidia’s chips are primed to do exactly that.
It already has extensive experience in providing the advanced graphics and video-processing chips for intensive computing required by high-end servers, scientific computing, autonomous vehicles, and various other AI and virtual reality applications.
Similarly, its chips are finding a comfortable home in the world of cybersecurity. Big data hogging analytics demand chips that can handle the load placed on them.
Nvidia’s Morpheus platform enables cybersecurity developers to create optimized AI pipelines for filtering, processing, and classifying large volumes of real-time data.
Wall Street is taking notice. They now expect Nvidia to more than double sales this year to $54.6 billion. Then it’s forecast to grow another 50% next year to $81 billion. Profits are also anticipated to grow exponentially.
Hang onto this one because it’s going to be a wild ride.
The market is writing off Chinese e-commerce leader JD.com (NASDAQ:JD) and that’s a big mistake.
Shares of the internet retailer are down 50% from recent highs and 40% lower this year alone. But the stock is super cheap yet it keeps falling.
JD.com trades at less than 10 times next year’s earnings and at a fraction of its sales and expected earnings growth rate. It also goes for a bargain basement price of only 7 times the free cash flow it produces.
That’s a unique opportunity for investors. The Chinese government is intent on supporting its stock market. It just announced it was cutting in half the cost of securities transactions. Barron’s reports the government-supported Global Times says the plan is to “invigorate the capital market and boost investor confidence.”
Along with the e-tailer shifting to sell more low-priced goods amid a difficult Chinese economy, and JD.com was able to report better than expected earnings.
JD is one of the most popular platforms in China for online shopping, along with rival Alibaba (NYSE:BABA). It hosts some of the biggest shopping extravaganzas in the world between its midyear 618 event and the massive Singles Day shopping holiday in November.
Expect JD.com to come roaring back to life sooner rather than later.
Lockheed Martin (LMT)
The largest U.S. defense contractor, Lockheed Martin (NYSE:LMT) seems like a surefire winner.
While there is risk to the investment from cuts to military spending, Defense Dept. budgets rarely see actual spending decline. It’s just the rate of growth that’s often cut.
Lockheed Martin generated $66 billion in sales in 2022, virtually all of it from government contracts. Approximately three quarters of its business is with the U.S. government; some 26% is with international customers.
That’s not to say Lockheed is without risk. The F-35 fighter jet is Lockheed’s biggest program, accounting for 27% of total sales last year. If Congress cuts the program or diverts money from it to other military priorities, it could obviously have an adverse impact on the contractor’s performance.
Because Lockheed is involved in some of the most critical weapons systems designed today, the prospects for growth are enormous.
Among its many programs, Lockheed contributes to the Patriot missile defense system, the Apache helicopter weapons-targeting system, the Javelin anti-tank missile program, building Black Hawk and other Sikorsky helicopters, the U.S. Navy’s Aegis air and missile defense systems, the Trident intercontinental ballistic missiles, and more.
There are many valid critiques of U.S. military spending and priorities. There also seems little will in Washington to fundamentally alter the trajectory the current programs are on. That makes Lockheed Martin a solid investment choice for today and tomorrow.
MercadoLibre (NASDAQ:MELI) is often referred to as the Amazon (NASDAQ:AMZN) of Latin America. It wholly focuses on e-commerce and fintech solutions in South and Central America. Growth seems unstoppable.
Between 2017 and 2022, revenue grew from $1.4 billion to $9.4 billion. That’s a compounded annual growth rate of over 46%. Gross merchandise volume grew at a CAGR of 24% over the same time period while total payment volume surged 42% annually. Growth rates are accelerating this year.
Analysts forecast Latin America’s e-commerce growth to rise 24% annually through 2030. In comparison, the more mature U.S. e-commerce is stalling at just a 14% or 15% share of the overall retail market. The experts say online retail is now in “slow growth mode.”
While the hot Latin American market is attracting more competition (Alibaba and others are moving in) MercadoLibre will capture the bulk of the trade because of its first-mover status.
The fintech trade is growing even faster. Financial technology is forecast to be a global $1.5 trillion industry by 2030. Latin America’s CAGR is pegged at 29%.
MercadoLibre’s Mercado Pago payments platform is dominant in the region, preventing the likes of Amazon or Sea Limited‘s (NYSE:SE) Shopee from gaining much share.
Look for MercadoLibre itself to continue own the market and continue growing in the future.
Tech giant Microsoft (NASDAQ:MSFT) is a cash printing machine for investors. Over the past 10 years, the company generated a total return of over 1,000% compared to 230% for the S&P 500.
A $10,000 investment in 2013 would be worth more than $117,000 today. You would have just $33,000 buying the benchmark index.
It’s one of the reasons Microsoft is considered one of the Magnificent 7 stocks. They are the seven companies propelling the S&P 500 into bull market territory.
The driving force behind Microsoft’s out performance is really three-fold.
Although PC sales are declining (Windows OEM licensing revenue dropped 25% last year) it still generated $21.5 billion in revenue. It also still carries enormous gross margins for Microsoft.
Windows also drives commercial sales growth (that revenue jumped 5% in fiscal 2023), powers its cloud computing business, and will be behind its artificial intelligence services it develops. It’s a huge brand opportunity.
Speaking of the cloud, Microsoft Azure is the second largest cloud service provider behind Amazon’s AWS. It owns a 22% share of the market, well ahead of No. 3 Google at 10%.
Financially, Microsoft is tops. The company has $111 billion in cash, equivalents, and short-term investments with long-term debt of only $42 billion. It generated free cash flow of around $60 billion a year and is as solid a business as you could want.
On the date of publication, Rich Duprey 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.