Cathie Wood stocks have been on a big roll lately, as Ark Innovation ETF (NYSEARCA:ARKK) soared 31% in November, with Coinbase (NASDAQ:COIN), Roku (NASDAQ:ROKU), Shopify (NYSE:SHOP) and CRISPR (NASDAQ:CRSP) among the winning names that pushed Wood’s Innovation fund far into the black. So maybe ARKK, which is now up 50% in 2023, is finally mounting a big comeback after losing 67% in 2022 and 23% in 2021. Indeed, with interest rates and inflation both falling sharply, while the economy is continuing to grow significantly, Wood’s growth names should perform well in the current environment. But even in the best of times, some of Wood’s top picks, such as Teladoc (NYSE:TDOC), Virgin Galactic (NYSE:SPCE) and Peloton (NASDAQ:PTON), have performed horribly. Here are three Cathie Wood stocks that look poised to perform very well over the medium term and the long term.
Pacific Biosciences (PACB)
Pacific Biosciences (NASDAQ:PACB) develops tools that are used to detect abnormalities in DNA. The company appears to have a new hit device on its hands.
Specifically, Swiss bank UBS is predicting that the sales generated by the device, called Revio, will jump 45% in 2024. Revio enables labs to conduct long read sequencing of DNA. This technique allows scientists to detect many important characteristics of DNA that are missed by short-read sequencing which is currently the standard technique.
UBS raised its rating on PACB stock to “buy” from “neutral,” although it cut its price target to $10 from $13. The shares are currently changing hands for around $8.35.
Last quarter, PACB’s sales jumped 72% versus the same period a year earlier to $55.7 million, as it sold an impressive total of 52 Revio systems. What’s more, its net loss per share fell to 26 cents from a per-share loss of 32 cents in Q3 of 2022.
As of December 7, PACB stock accounted for 1.87% of Woods’ total holdings.
Roku (ROKU)
In an October column, I wrote that “Multiple macro trends, including a rebounding advertising market and intense streaming wars, should help lift Roku stock in the medium term.”
That seemingly did turn out to be the case, as the firm’s sales soared 20% last quarter versus the same period a year earlier, while its EBITDA, excluding certain items, came in at a strong $43.4 million, much better than the adjusted EBITDA loss of $34.4 million that it reported for Q3 of 2022.
Multiple firms other than Cathie Wood’s Ark Investment are now upbeat on ROKU stock. Specifically, Cannonball Research on Nov. 27 raised its rating on ROKU to “buy,” citing its belief that the company’s ad revenue will surge 17.5% in 2024, even if the overall ad market does not improve further. Cannonball also expects Roku to be boosted by “streaming price increases” and user base growth.
Meanwhile, echoing an assertion I’ve made for a few years, DA Davidson believes that Roku could be taken over by a larger company. Indeed, I think that Roku could very effectively help many firms sell their products and/or services.
As of December 7, ROKU stock accounted for 6.2% of Woods’ total holdings.
DraftKings (DKNG)
DraftKings (NASDAQ:DKNG), which specializes in providing a platform for online sports betting, delivered impressive Q3 results on November 2, as its top line soared 57% year-over-year to $790 million. And the company now expects its EBITDA, excluding certain items, to come in at a robust total of about $200 million during the current quarter.
Also noteworthy is that, for all of 2024, DKNG now predicts that it will generate adjusted EBITDA of roughly $400 million.
That puts its current forward price-EBITDA ratio at about 40. While that’s a high valuation, I believe it’s attractive, given the company’s rapid growth. What’s more, the firm is likely to continue growing very quickly as more states legalize online sports betting and as it moves into additional overseas markets.
Indeed, DraftKings predicts that its adjusted EBITDA will jump to $1.4 billion in fiscal 2026.
The company’s strong growth outlook makes it one of the best Cathie Wood stocks at this point.
As of December 7, DKNG stock accounted for 2.86% of Woods’ total holdings.
On the date of publication, Larry Ramer held a short position in COIN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
