Cathie Wood’s ARK Invest funds were unstoppable in 2020 as investors piled into disruptive innovation stocks during the low-rate lockdown environment. After peaking in early 2021, the ARK funds — most notably the ARK Innovation Fund (NYSEARCA:ARKK) — went on a multi-year decline, eventually bottoming out at the tail end of 2022.
Today, the technology sector bull market is alive and well, thanks in part to the generative artificial intelligence (gen AI) rush and hopes for future Fed rate cuts. Despite tech’s momentum, ARKK has seen relatively muted performance, now up just 12% in the past year and actually down 10% year to date.
Only time will tell if the “disruptive innovation” theme will play catch up with the rest of the sector once the Fed readies to cut rates. Either way, Cathie Wood stocks seem worth checking in on here should the tech rally begin to reward some riskier, disruptive innovators who aren’t yet making a profit.
Who knows? Perhaps a few rate cuts could be enough to help Cathie Wood’s disruptive-focused thematic investment style make a comeback. Here are three of my favorite Cathie Wood stocks to buy.
UiPath (PATH)
UiPath (NASDAQ:PATH) is an automation software developer that aims to tackle repetitive everyday tasks in the workplace. Now that shares have come back to Earth, UiPath is arguably one of the most intriguing gen AI plays in the entire ARKK.
At writing, PATH stock is down around 75% from its 2021 peak, which may make it an intriguing value proposition for hyper-growth investors seeking underrated AI upside but not mind the firm’s lack of profits.
Today, PATH stock goes for 8.8 times price-to-sales (P/S), which isn’t all too high given the magnitude of growth behind its automation platform. As UiPath improves its automation capabilities with gen AI while rates potentially take a few backward steps, I certainly wouldn’t bet against the firm.
The company’s expanded partnership with Alphabet (NASDAQ:GOOG, GOOGL) Google Cloud is also a compelling development that investors should monitor.
Robinhood Markets (HOOD)
With Roaring Kitty coming out of hibernation after around three years with posts on X (formerly Twitter), it should come as no surprise to see the action in the 2021-era meme stocks picking up once again. Indeed, the “big money” meme stock short-sellers who didn’t learn their lesson in 2021 have been feeling the squeeze once again.
The initial boom in shares of Gamestop (NYSE:GME) and AMC Entertainment (NYSE:AMC) have since gone bust in a big way, less than a week since Roaring Kitty’s return. Still, it’s a terrible idea to short either GME or AMC stock as they reverse course. Both meme stocks could easily rocket or implode tomorrow, potentially by high double-digit percentage points. Either way, Robinhood Markets (NASDAQ:HOOD) is enjoying the pick-up in trading activity.
As the meme stock frenzy and soaring stock market win the love of the retail crowd again, Robinhood stands to gain. Recently, Bank of America (NYSE:BAC) analyst Craig Siegenthaler double-upgraded HOOD stock, citing “the emergence of a new bull market” and “rebounding retail engagement benefits.” He’s right. Roaring Kitty’s return could certainly amplify the latter catalyst.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) is the messenger RNA (mRNA) technology innovator Cathie Wood has steadily added to in recent years. Undoubtedly, many investors have been throwing in the towel on MRNA stock as COVID-19 vaccine sales dwindled.
Cathie Wood’s contrarian buy of the vaccine maker is intriguing, especially as the company continues advancing many promising potentials through trials. Despite the recent FDA delay in its respiratory syncytial virus (RSV) vaccine, I still view Moderna as still one of the most innovative companies in the biotech scene. However, it could take a few more quarters for most other investors to get truly excited about the growth potential of next-generation mRNA treatments.
With the stock gaining more than 100% from its November 2023 lows, perhaps it’s time that growth investors had followed Wood’s lead. For growth-hungry investors like Wood, willing to ride out the volatility while focusing on the long-term narrative, it makes sense to pursue Moderna now that it’s gaining traction again. Perhaps the RSV vaccine could be the next big thing to be excited about.
On the date of publication, Joey Frenette held shares of Alphabet (Class C). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
