3 stocks Cathie Wood is buying now that should also be on your list
Cathie Wood’s notoriety as a star stock pick has taken a big hit this year. Wood is an advocate of disruptive innovation and therefore owns some of the best performing growth stocks in his group of exchange-traded funds (ETFs) ARK Invest. With growth stocks falling in this bear market, Wood’s net worth has also eroded.
But she seems unfazed and is actually using the market selloff to double down on some of her most compelling stocks. Here are three she’s buying right now that you want to put on your list as well.
Cathie Wood sees 560% upside in this title
Global electric vehicle (EV) sales doubled to a record 6.6 million units in 2021, and the momentum continues. According to the International Energy Agency, electric vehicle sales were up 75% year-over-year in the first quarter of this year.
Guess which electric vehicle manufacturer is in the lead: Elon Musk’s You’re here (TSLA -0.43%). What you see in the chart below, however, is Tesla’s global market share. In the United States, Tesla captured 75% of the electric vehicle market in the first quarter of 2022.
The first quarter, in fact, was a record sales quarter for Tesla, and its operating margin also jumped more than 4 percentage points year-over-year despite soaring raw material costs.
Wood is extremely bullish on electric vehicles and (unsurprisingly) bullish on Tesla. In fact, ARK Invest’s latest stock market model estimates that Tesla will be worth $4,600 per share by 2026, up about 560% from today. With the company now offering a 3-for-1 stock split, this target would imply a price of $1,533.33 if the shares split and everything else remained equal.
Wood is supporting his optimism with regular purchases of electric vehicle stock. This is actually the largest holding of all ARK Invest ETFs combined, with a 7.23% weighting on each as of June 21. If you’re optimistic about electric vehicles, you simply can’t ignore Tesla.
Wood thinks this stock may be the next Amazon
Cathie Wood owned Shopify (STORE 7.47%) for several years now, and she’s been buying the recent drop in e-commerce stock. Stocks, in fact, have plunged more than 70% in 2022 alone. The company is falling victim to the growth stock selloff this year, with fears of an economic downturn heightening investor concerns.
Yet it continues to grow, albeit at a slower pace compared to the past year or two. And he makes calculated moves like acquiring Deliverr to catch up Amazon (AMZN 3.20%), which holds a huge lead in the US e-retail market. But challenges to the giant’s key competitive advantages like one-day and two-day delivery should help Shopify gain traction.
In an interview with BBN Bloomberg last year, Wood even projected that Shopify would become the next Amazon, given the opportunities of social e-commerce or the ability to buy and sell products through social media platforms. Shopify, by the way, has ties to all the major social media companies.
The stock’s 10-to-1 split will take place on June 28, which has revived some investor interest in the sluggish stock. Wood, of course, is looking at Shopify stock for its long-term potential, not the stock split. So should you.
The Little-Known Stock Wood Buys on the Clearance Market
TuSimple Holdings (TSP 9.53%) is perhaps one of Cathie Wood’s lesser-known stocks, but it’s easy to see why ARK Invest is loading up on it: the family of funds sees self-driving vehicles as one of the biggest innovations, and projects that revenue autonomous logistics will grow from nearly zero today to $900 billion in 2030.
TuSimple develops self-driving systems for semi-trucks and has partnered with Traton, owner of the Navistar and Scania truck brands, to build tractor-trailers with Level 4 (L-4) self-driving technology (true self-driving, but with limited capabilities). TuSimple currently has nearly 100 L-4 autonomous semi-trailers in service, including 75 in the United States and 25 in China. But the heart of TuSimple’s growth is its Autonomous Freight Network (AFN) launched in 2020.
AFN is a mapped network of routes and terminals where autonomous trucks can move goods with real-time tracking and monitoring. TuSimple offers two options:
- Carrier-Owned Capacity Model: Customers purchase L-4 self-driving trucks and pay TuSimple a per-mile subscription fee to move freight within its AFN.
- The TuSimple Capacity Model: Customers pay the company a mile-based access fee to use its trucks and the AFN.
TuSimple says it expects to derive “essentially” all of its revenue from AFN. Right now, though, it’s only generating revenue under the second option and growing — its revenue jumped 140% to $2.3 million in the first quarter.
By 2026, TuSimple expects to generate its first significant revenue from carrier-owned capacity.
There is potential, but also risks, in a start-up action. Still, Cathie Wood bought TuSimple shares in March before buying them back twice so far in June, possibly to take advantage of the stock’s correction. At this price, you might also want to keep this stock on your radar.