Cathie Wood is starting to ride high again. Her ARK Invest family of exchange-traded funds (ETFs) has soared as high as 14% over the last two trading days. The market's rotating back into her breed of disruptive growth stocks, so what's she buying these days?
Tesla (NASDAQ:TSLA), Twilio (NYSE:TWLO), and Sea Limited (NYSE:SE) are three stocks ARK Invest bought on Monday, adding to Wood's existing positions. What does she see in these three fast-growing companies? Let's take a closer look.
Image source: Getty Images.
Tesla
ARK Invest hadn't added to its largest position -- Tesla -- since early June of last year. Everything changed late last week when a strong quarter and the market's negative reaction turned Wood into an opportunistic buyer of the electric vehicle speedster. After being a seller of the hot stock over the past several months to raise funds to add to ARK Invest's sliding positions, ARK is now giving Tesla some attention.
Buying more Tesla on Monday means she has added to her stake in two of the past three trading days. Revenue growth clocked in at 65% in its latest quarter. Tesla is trading for 92 times this year's projected earnings, but it has also been consistently trouncing Wall Street's profit targets. CEO Elon Musk also expressed his confidence that full-self driving technology will be viable by the end of this year. Since Tesla charges a hefty premium for that perk, Musk feels it could be the major source of profitability for the company in the future.
Twilio
The most powerful computer you may ever own could be in your pocket right now. Twilio is the leading provider of communication features that developers incorporate into their smartphone apps.
BofA analyst Michael Funk reinstated coverage of Twilio near the end of last week with a buy rating. His $250 price target offers more than 20% of upside from current levels. Funk sees sustainable revenue growth of at least 30% a year through the next five years.
Revenue rose 65% for Twilio's latest quarter, up a still encouraging 38% on an organic basis. We're not giving up our smartphones anytime soon, and global app usage will continue to expand and favor the most useful applications that incorporate in-app communication solutions to drive results.
Sea Limited
Asian investments have fallen out of favor, largely on concerns of China's government tightening its grip on companies and lowering the ceiling for growth stocks. Singapore's Sea Limited may be the baby that got tossed out with the bathwater. Sea Limited is a thriving player across various fronts.
Garena is a gamer-centric digital entertainment platform, making it a major player in gaming and esports. Shopee is an e-commerce juggernaut, as Sea Limited has experienced nine consecutive quarters of triple-digit order growth. SeaMoney heads up Sea Limited's starring role in fintech and digital payments.
Sea Limited just works. It just completed its fourth consecutive year of triple-digit revenue growth. Triple-digit top-line gains aren't sustainable, but Sea Limited has years of strong growth in the tank.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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February 01, 2022 at 09:40PM
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