The 3 Most Undervalued Cathie Wood Stocks to Buy in July 2024

  • These three undervalued Cathie Wood stocks can boost the returns of her Ark Invest family of ETFs.
  • PayPal Holdings (PYPL): The online payments processor holds the dominant market share in the space while expanding into new verticals.
  • Incyte (INCY): The biotech has a strong portfolio of existing drugs and a robust pipeline of potential blockbusters.
  • Meta Platforms (META): The social media platform offers a competitive edge in AI because it targets the consumer side.
Undervalued Cathie Wood Stocks - The 3 Most Undervalued Cathie Wood Stocks to Buy in July 2024

Source: rhendrikdwenz via Shutterstock

Cathie Wood was the hottest money manager in the game in 2020. Her Ark Invest family of funds offered investors blistering returns on their money. At one point, she more than doubled their money in a year. She has run hot and cold since. 

Last year, she was white hot, but in 2024, the investing guru has cooled off again. All of her funds are trailing both the S&P 500 and the tech-heavy Nasdaq 100 by double-digit percentages.

That suggests there are many undervalued Cathie Wood stocks to choose from. While she is known for her big, bold bets on stocks that could pay off big time down the road, the three companies below offer some of the best values today. They might be worth a position in your own portfolio at these levels.

PayPal Holdings (PYPL)

PayPal logo and front of headquarters. PYPL stock
Source: Michael Vi / Shutterstock.com

Payments platform PayPal Holdings (NASDAQ:PYPL) is the first undervalued Cathie Wood stock to consider. The stock is down almost 3% this year and 11% over the last 12 months but possesses several levers it can pull to grow once more.

The payments space is crowded. Where PayPal once held the field to itself, it now competes against Block (NYSE:SQ), Shopify (NYSE:SHOP) and Apple (NASDAQ:AAPL). The latter wants to muscle its way in with more robust offerings. Last month, it introduced Tap to Cash, which allows iPhone users to transfer funds by tapping their devices against other iPhones. It will also let iPhone users access third-party buy now, pay later options when using Apple Pay. It shut down its own Apple Pay Later offering.

Yet, PayPal still dominates the market with a 45% share of global online payment processing technologies. That is more than the next 12 largest rivals combined, and its share is even bigger when you add in Venmo and Braintree. Payment volume is also accelerating, up 14% in the first quarter to $404 billion. 

PayPal is also launching an ad platform for marketers. While something of a “me too” product as everyone wants to be an ad platform these days, having insight into the spending habits of people using the service should provide a competitive edge. 

PYPL stock trades at 14 times next year’s earnings or less than Wall Street’s long-term earnings growth forecasts and 12x the free cash flow (FCF) it generates. It makes PayPal a leading undervalued Cathie Wood stock to buy today.

Incyte (INCY)

incy stock
Source: Eyesonmilan / Shutterstock.com

Biotech stock Incyte (NASDAQ:INCY) has been on a roller coaster ride but recently landed 8% below where it was a year ago. That is an excellent buy-in price. Its lead hematology drug, Jakafi, continues to grow, generating $572 million in the first quarter. Although that was actually down 1% from a year ago, it was due to a $55 million inventory reduction. The therapy is still on a steady growth path of mid-single-digit gains.

Incyte’s second-biggest drug, the dermatology therapy Opzelura, saw sales shoot 51% higher to almost $86 million. It should move even higher, as it launched in Europe. The biotech also completed its acquisition of Escient Pharmaceuticals. It now has a solid portfolio of existing treatments, a pipeline of promising therapies, and new additions like povorcitinib and new oral drug candidates from Escient.

INCY stock trades at a significant discount to Wall Street’s $72 per share one-year price target. Going for just 12 times next year’s earnings, a fraction of its projected earnings growth rate, and 16x FCF, Incyte looks to have tremendous upside.

Meta Platforms (META)

In this photo illustration the Meta logo seen displayed on a smartphone and in the background the Facebook logo
Source: rafapress / Shutterstock.com

For a stock up 54% this year and 83% of the past year, Meta Platforms (NASDAQ:META) doesn’t present as the typical undervalued Cathie Wood stock. Shares also trade at 27 times estimates and 9 times revenue — hardly the bargain-basement stock you would expect. 

However, Wall Street expects Meta earnings to grow at double the rate they grew over the past five years as many of the initiatives it put into place gain traction. Meta Platforms’ long-term earnings are expected to expand 30% a year compared to less than 15% over the past five years. 

Most notable is Meta’s investments in artificial intelligence. The social media platform increased the budgets for both its operating expenses and capital spending for the rest of the year, with CEO Mark Zuckerberg saying it is important for Meta to “invest significantly more in the coming years.”

Initially, the market recoiled at Meta’s AI ambitions, remembering the sinkhole for cash its metaverse plans created. But possessing some of the most powerful large language models around, Meta’s Llama-based AI agent is targeting the consumer side of the equation. Most AI models are for commercial purposes, and Meta Platforms’ distinction gives it a competitive leg up.

With AI proliferation, Meta’s dominant social media presence, and earnings growth potential, META stock seems poised to grow into its current valuation.

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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.


Article printed from InvestorPlace Media, https://investorplace.com/2024/07/the-3-most-undervalued-cathie-wood-stocks-to-buy-in-july-2024/.

©2024 InvestorPlace Media, LLC