At one point, Cathie Wood’s picks were gold. Her ARK funds saw inflows of $20 billion in 2020 and another $8 billion in 2021. There was no doubt Ark Investment Management found its sweet spot at the time. Unfortunately, the good times didn’t last. However, there are still plenty of red-hot Cathie Wood stocks to buy.
After a brief bounce in 2023, investors seem to have lost their patience, pulling $2.2 billion out of all the ARK ETFs.
Worse, over the last two years, she doubled down on Tesla (NASDAQ:TSLA), hoping it would come back strong with its dominance in electric vehicles, autonomous driving and robotics. Her funds were even invested in Nvidia (NASDAQ:NVDA). Unfortunately, she exited NVDA too early, missing out on a monster run.
And while it’s easy to find fault in tough times, we do have to remember Cathie Wood is human. None of us on Wall Street will ever get it right every time. And while her funds may not be so hot at the moment, some of the picks still are.
Tesla (TSLA)
When I last mentioned Tesla, I said, “It’s time to buy the fear. Granted, sales have slipped, but it’s still dominating the market.”
That was on May 20, as Tesla traded at about $175. It’s up to $178, which is still an attractive buy, especially with EV sales regaining momentum. I’d like to see Tesla initially retest $205 from that last traded price.
While Cathie Wood’s fund suffered on Tesla’s decline, I wouldn’t write the EV stock off yet. Wedbush analysts say the $56 billion Elon Musk compensation removes a $20 to $25 overhang on the TSLA stock. That’s because the award now dispels fears Musk will focus on other projects outside of Tesla, including a generative artificial intelligence project.
Two, we have to consider that electric vehicle sales are starting to recover again. Remember, “Six of the 10 biggest EV makers in the US saw sales grow at a scorching pace compared to a year ago,” says Bloomberg.
In addition, according to ARK analysts, Tesla’s robo-taxi growth could propel it to $2,600 by 2029, about 1,350% higher than its current level.
Amazon (AMZN)
On June 6, ARK Invest’s ARK Next Generation ETF just picked up 53,368 shares of Amazon (NASDAQ:AMZN) for about $9.9 million.
This was after Amazon’s recent acquisition of NBA media rights, which could help significantly boost subscriber numbers for its Prime Video streaming platform. Amazon reportedly spends $1.8 billion annually on access to regular-season NBA games, in-season tournaments and playoff games.
In addition, its opportunities in e-commerce, cloud services and artificial intelligence should continue to drive substantial growth for years. Even better, analysts are still bullish on the upside, with JPMorgan arguing that Amazon will surpass Walmart (NYSE:WMT) as the largest U.S. retailer in 2024. The firm also has an overweight rating on AMZN, with a $240 price target.
Plus, earnings haven’t been too shabby. In its most recent quarter, the company posted earnings per share of $0.98, higher than expectations for $0.83. Revenue of $143.3 billion was also greater than expectations of $142.5 billion.
PagerDuty (PD)
Cathie Wood’s funds added 187,039 shares of PagerDuty (NYSE:PD) at $18.97 per share in late May.
The cloud computing stock is up to $21.59, so it’s off to a good start. To help, analysts at Craig-Hallum just upgraded the PG stock to a buy rating, with a price target of $30.
“Craig-Hallum said the company has made material improvements that should bear fruit going forward while lessening tech layoffs and headwinds should eventually improve topline, customer count, churn and other metrics,” as noted by Seeking Alpha. “We believe the current discount to peers is not appropriate and see that gap closing. Our price target of $30 is based on a 27x FCF or 4.9x revenue multiple.”
Even better, earnings have been solid. In its recent quarter, the company posted adjusted EPS of $0.17 on revenue of $111.2 million compared to expectations of $0.13 on revenue of $111.5 million. It also delivered its seventh straight quarter of non-GAAP profitability and announced a new $100 million buyback program.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.