The world of stock investing is a melting pot of great minds, including legendary investors Warren Buffet, Jess Livermore, Peter Lynch, George Soros—and Cathie Wood, the chief executive officer, chief investing officer and founder of ARK Investment Management. Her flagship fund, Ark Innovation Fund (NYSEARCA:ARKK), currently holds $7.7 billion in assets under management. At its peak, the fund produced a return of 45% annually.
It’s not uncommon for investors to look into superstar portfolios when building their own. So, today, let’s look at three Cathie Wood stock picks with strong growth potential. To come up with the list, I focused on positive earnings growth and revenue growth of more than 10% over the last quarter. I then sorted the list based on the highest revenue growth year-over-year (YOY). This allowed me to focus only on Cathie Wood stocks showing consistent growth.
UiPath (PATH)
As a growth investor, it’s unsurprising to see companies like UiPath (NYSE:PATH) in Cathie Wood’s portfolio. UiPath allows enterprises to tap into opportunities in technology and to grow at a scale.
Looking at the numbers, it’s clear why this is another beloved stock in Cathie’s portfolio. FY’24 revenue grew 24% YOY. Meanwhile, earnings-per-share improved from a loss of 60 cents to a loss of 16 cents.
Besides growing revenue and improving earnings, UiPath recently launched Autopilot, which offers an artificial intelligence (AI) assistant to assist with client tasks, further enhancing its clients’ experience.
The company has recently been named leader by Gartner Magic Quadrant for Process Mining, highlighting the strength of leading enterprises’ digital transformation. This further cements why it’s part of the growth stocks in Cathie Wood’s portfolio.
Palantir Technologies (PLTR)
Cathie Wood has been buying Palantir Technologies (NYSE:PLTR) through its firm’s ARK Autonomous Technology & Robotics ETF. If you are not familiar with it, Palantir comes from humble beginnings through contracts with government agencies to build its current business empire.
Palantir builds software that assists government officials in fighting terrorism and running investigations. Through its unique platforms, Palantir provides pattern identification and software features that leverage AI.
The company ended FY’23 in the green. Revenue saw a 17% bump year over year, reflected in increases in the commercial and government segments, which grew 20% and 14%, respectively. GAAP income also increased from an 18-cent loss to a 9-cent profit per share.
Palantir aims to continue its profitability streak to 2024. The company expects revenue to end between $2.65 billion and $2.67 billion and anticipates ending all 2024 quarters profitably. Judging from its Q1’24 results, it’s off to a great start.
With a strong performance and favorable outlook, it’s no surprise that Palantir is at the forefront of Cathie Wood stock picks.
PagerDuty (PD)
PagerDuty (NYSE:PD) is a cloud computing tech company specializing in software-as-a-service incident response management for information technology (IT). PagerDuty’s platform allows customers to collect digital signals and data that help correlate functions and processes to predict issues using a software-enabled system or device. The company’s PagerDuty Operations Cloud includes: AIOps, Customer Service Operations, Process Automation and PagerDuty Incident Management
PagerDuty Incident Management offers clients a bird’s eye view of company incidents and an advanced noise reduction to avoid run-ins on false positive signals.
Looking at its latest financials, we can find some clues as to why Cathie likes Pager Duty. FY’23 saw strong revenue growth of 16.2%, and losses per share narrowed from $1.45 to 89 cents.
In addition, Pager Duty expanded its operating margin by over 1,200 basis points, marking its second consecutive year of increasing non-GAAP profitability. This comes alongside a strong 10% growth in annual recurring revenue. With a strong trajectory and positive outlook, it’s no wonder it is part of Cathie Wood’s portfolio.
On the date of publication, Rick Orford 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.
