Cathie Wood remains a widely-following investment manager despite her fund’s epic fall from their respective highs. Though her more recent track record may not be anything to write home about, one can’t help but wonder what she’s up to as she looks to orchestrate some sort of recovery from the tech pullback of 2022. This has led to this list of the most undervalued Cathie Wood stocks to buy in April.
As a renowned money manager focused on disruptive innovators on the absolute cutting edge, one can expect amplified levels of volatility when it comes to any one of the Ark Invest lines of funds. But as the old saying goes, higher rewards often do entail a great level of risk tolerance. In this piece, we’ll explore the Ark Invest funds further to determine which of her holdings (new and old) may be the cheapest at this moment.
Of course, only time will tell where the tech-heavy Nasdaq and the innovative tech-heavy Ark Innovation Fund (NYSEARCA:ARKK) will end up next. Regardless, the Ark seems to be home to disruptive innovators, some of whom haven’t been this cheap, well, ever.
Coinbase Global (COIN)
Coinbase Global (NASDAQ:COIN) stock is the new top holding of Cathie Wood’s flagship ARKK fund after skyrocketing more than 286% in the past year. In the last quarter alone, shares of the crypto exchange platform are up more than 55%. That’s some serious parabolic momentum behind the name that’s helped the crypto-flavored fintech firm become a mainstay in more Ark funds than one.
Moving ahead, nothing short of extreme volatility should be expected from the top Cathie Wood stock. Though shares may not look cheap after doubling up many times over in the past few quarters while also boasting a price-to-sales (P/S) multiple north of 20 times, I do think continued strength in crypto markets could translate to considerable multiple compression. This makes it one of those most undervalued Cathie Wood stocks to buy in April.
Should Bitcoin surge past $100,000 over the medium term, as some pundits, like Fundstrat’s Tom Lee, think is possible, COIN stock’s massive upward spike may still have legs. Either way, the extreme correlation with crypto seems like a profound tailwind right now, one that I think supports the stock’s seemingly frothy valuation as the company expands its footprint internationally.
Roblox (RBLX)
Cathie Wood has been steadily increasing Ark Invest’s stake in Roblox (NASDAQ:RBLX) stock in recent quarters, and I don’t think it’s a mystery why. The video game platform is a prime example of the modern-day metaverse.
Undoubtedly, parents of Roblox fanatics may not get the hype surrounding Roblox and why their young ones want Robux currency as part of their birthday gift. That said, the Roblox environment represents far more than just a place to game; it’s a digital environment rich with digital “experiences.” And the experiences seem to be getting richer over time.
As the company makes it easier, perhaps with AI-enhanced text-to-3D asset types of tools, to create new digital “worlds” in Roblox, there’s a good chance the doubters could be shocked by the type of growth the firm is capable of once the firm unlocks the full power of its creator economy with a bit of generative AI magic. All in all, it’s one of those most undervalued Cathie Wood stocks to buy in April.
Could Roblox be offering investors a glimpse of the next generation of the internet? I think there’s a good chance it is. Either way, don’t expect Wood to give up on the stock just because it’s on a multi-year cold streak. If anything, her buying spree could continue as the selling action in RBLX stock exhausts.
Unity Software (U)
Sticking with the theme of gaming, we have game development platform Unity Software (NASDAQ:U), which may very well be one of the most undervalued stocks within the ARKK after sinking close to multi-year lows of around $25-26 per share.
Indeed, not much has gone right for the firm, which sagged after it delivered fourth-quarter earnings that included some very muted guidance. Full-year sales are expected to fall shy of the estimates as the company looks to move on after a rough year that included mass layoffs and considerable restructuring efforts.
Like Roblox, it’s hard to find any believers in U stock these days unless you’re a contrarian innovation investor like Cathie Wood. Profitability and increased competition in the game engine market may not bode well for Unity’s future.
That said, perhaps an AI-harnessing product, like Unity Muse, could help propel it back on the sales (and margin) growth track as Unity looks to do its best to leverage AI tech in a way to help its many creators do more ambitious projects with less time and effort. I think Cathie Wood is right to keep holding on.
On the date of publication, Joey Frenette 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.
