Cathie Wood’s investing style is bouncing back into fancy. The co-founder, CEO, and investment manager of Ark Invest is winning again. Her most popular exchange-traded fund has risen 6% over the past month, a welcome contrast to the flat overall market in that time. Her 14% return over the past year may not seem all that impressive, but it’s comfortably ahead of the market.
Wood was busier than usual on the trading floor on Tuesday. She added to her existing stakes in Advanced Micro Devices (NASDAQ: AMD), Shopify (NASDAQ: SHOP), and Intellia Therapuetics (NASDAQ: NTLA) on Tuesday. Let’s take a closer look at her latest purchases.
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1. Advanced Micro Devices
When AMD steps up with its first-quarter results next week, it should be the chipmaker’s strongest showing in a long time. Analysts see revenue rising 30% to $7.1 billion. It will be AMD’s strongest year-over-year growth in nearly three years, and its fourth consecutive quarter of sharply accelerating revenue gains.
The news should be stronger on the bottom line. Those same Wall Street pros see a heartier 52% jump in earnings to $0.94 a share, almost as much as what AMD earned for all of last year. It will be a record showing for the company, and momentum is on its side. AMD has found a way to narrowly best analyst profit targets over the past year.
Image source: Getty Images.
But let’s not call AMD a winner despite its improving fundamentals. Shares have plummeted 40% over the past year, and the company recently announced that it will be taking a charge of roughly $800 million for the banning of its MI308X processor in China. This charge is naturally not baked into financial update it will announce after the market close next Tuesday.
AMD’s accelerating growth stems from the surging demand in AI chips and data center buildouts. Semiconductor stocks are notoriously cyclical, but this trend seems to have legs. The scenario would be rosier if AMD was thrust into the middle of a trade war, but the stock’s discount appears to be Wood’s opportunity. The shares are trading for a reasonable 22 times this year’s estimates earnings and just 16 times next year’s target. It’s growing faster that pace now, so sustaining its healthy growth is the key to future upticks.
2. Shopify
Two days after AMD updates investors on its latest numbers, Shopify will follow suit. The operator of the popular e-commerce platform is eyeing another quarter of strong growth, with analysts modeling 25% and 30% gains on the top and bottom line, respectively. That’s par for the course when it comes to Shopify. Revenue gains have topped 20% annually for more than a decade.
The company has been able to keep that streak going, even when it unloaded its profit-stifling logistics business two years ago. Analysts see revenue jumps topping 20% through at least the next two years. Shopify arms entrepreneurs and established brands with white-label e-commerce solutions, and the company has thrived under founder CEO Tobi Lütke.
Despite Shopify’s success, this is still a critical report. Nearly a dozen analysts have slashed their price targets for the top e-commerce company. They are concerned about near-term retail trends dimming as consumer confidence continues to slide. Time is still on its side. Shopify has helped businesses sell $1 trillion through its platform since 2006. More impressively, half of those transactions have happened over just the past two years.
3. Intellia Therapeutics
Wood is a buyer of gene-editing stocks, and she’s not the only one who sees a compelling price on Intellia Therapeutics these days. Andy Chen at Wolfe Research upgraded the stock to Outperform last week, believing that the developer of CRISPR-based therapies for treating devastating genetic orders is too low to ignore.
Despite a current market cap approaching $850 million, its strong net-cash position drops its enterprise value below $200 million. With brisk enrollment for the final clinical phase trial for a promising treatment, there is plenty of upside. Chen’s $21 price target suggests that the stock will more than double from here.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intellia Therapeutics, and Shopify. The Motley Fool has a disclosure policy.
