Given the stock market’s volatility, you’d want to consider the investing principles of Warren Buffett or Benjamin Graham rather than Cathie Wood. The stocks embodying Cathie Wood’s disruptive investing spirit led Mr.Market to record gains, but that’s not what the market’s looking for now. Therefore, it’s perhaps an opportune time to snag undervalued Cathie Wood stocks offering superb upside potential.
Over the past decade, Cathie Wood has emerged as one of the most influential investing gurus. As the driving force behind ARK Invest (NYSEARCA:ARKK), her dynamic approach, which is centered around disruptive innovation, has yielded remarkable results. Her investing philosophy revolves around identifying multi-year trends, particularly in companies involved in AI, robotics, and blockchain, among other sectors.
Though it might not seem like the best time for fearless investing, contrarians would think otherwise. Wagering on undervalued Cathie Wood stocks could prove incredibly lucrative over the long term, especially when the market gains momentum again.
Tesla (TSLA)
EV pioneer Tesla (NASDAQ:TSLA) was one of the recent top additions to ARK Investment Management’s portfolio. Cathie Wood’s firm added a hefty 1.38 million shares to its portfolio, taking its total holdings to 5.18 million.
Tesla has been a battleground stock over the years, but perhaps more so of late. The EV market slump has caused Tesla and its peers to scamper to find new ways to boost demand. Despite their best efforts, given the strong headwinds, EV companies struggle to advance beyond the current phase. Tesla is in the same boat, but it’s shown in recent weeks that it can drive the next phase of innovation in the EV space.
Most experts agree that Full Self-Driving (FSD) could be a watershed moment for Tesla. FSD could add millions in recurring revenues for the firm while positioning its head and shoulders above its competition. It received approval from China to advance its FSD technology, a crucial missing piece of the puzzle. Moreover, its CEO Elon Musk announced a more economical Tesla vehicle slated for release next year. These developments led to a strong rally in TSLA stock following a forgettable a first-quarter of 2024.
Roku (ROKU)
Streaming platform Roku (NASDAQ:ROKU) has recovered incredibly after stumbling post-pandemic. However, though its fundamentals continue to shine, ROKU stock has been a start-stop story. Its stock is down 35% year-to-date (YTD), though it gained 11% last year. Despite languishing in a prolonged dip, its superb growth trajectory in the streaming realm and broad revenue streams, including devices and advertising, position it for stellar gains. Wood concurs, adding an eye-brow raising 3.03 million shares in the first-quarter (Q1).
Furthermore, the company recently wrapped up another solid quarter of results. It reported a smaller-than-expected GAAP EPS loss of 35 cents, beating estimates by a sizeable 27 cents. On top of that, with a double-digit drop in operational expenses, it has narrowed its operating loss to $72 million from last year’s $212.5 million.
Additionally, its revenue surged to $882 million, a 19% increase on a year-over-year (YOY) basis, exceeding expectations by $31.65 million. It was the seventh consecutive quarter where it bested analyst top-line estimates and the fourth successive where sales jumped by double-digit margins. Also, Roku saw its streaming households grow to 81.6 million, adding 1.6 million from the previous quarter.
Nu Holdings (NU)
Nu Holdings (NASDAQ:NU) is one of the fastest-growing digital banking platforms in Central and South American regions. It has been a hyper-growth business, growing its top-line results rapidly in recent quarters. In each of the four quarters, it handily beat analyst estimates while increasing its sales by double-digit margins.
Its most recent earnings print, showed a tremendous jump in profits, reporting a 522% increase in net income to $360.9 million for the fourth-quarter (Q4). Moreover, revenues jumped by 57% YOY, hitting new highs of $2.4 billion.
Moreover, Nu’s growing popularity is shown by its ability to attract a staggering 4.8 million new clients in Q4, catapulting its total customer base to an impressive 93.9 million. Also, the 83% active engagement points to the growing trend of consumers embracing digital banking solutions.
Consequently, NU stock has picked up from where it left off last year, rising 41% in value YTD, beating the S&P 500’s 8% gain. Hence, it’s easy to see why Wood added 871,000 shares to ARK’s portfolio, capitalizing on a potential giant in the evolving financial sector.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
