You have to applaud Cathy Wood’s all-weather transparency. The co-founder, CEO and stock picker of Ark Invest exchange-traded funds (ETFs) announces all of its transactions at the end of each trading day. Investors knew what she was buying and selling in 2020 when her major funds more than doubled. They still put daily updates now when their ETFs are lagging badly behind the market.
What do you buy these days? Wood has started the new trading week by adding its existing stakes in it Adobe (ADBE -1.69%)And the Velo3D (VLD -4.42%)And the General motors (GM -5.63%) on Monday. Let’s see why she builds her positions with these three names.
It’s great to see Wood go shopping, but the market doesn’t think it’s all that great when it’s her investments doing the shopping. Adobe shares hit a two-year low last week after the desktop publishing leader announced the release of A $20 billion deal For online design specialist figma.
That’s not the only reason why Adobe stock is back to where it was in early 2020 during the initial COVID-19 sale. Year-on-year revenue growth has slowed in four of the past five quarters, and guidance calls for the current quarter to be another period of slowing earnings gains.
Adobe is a juggernaut, and I’m not just talking about Photoshop and PDF files. Its Creative Cloud digital publishing toolkit is the cloud-based gold standard for the masses. Spending $20 billion in cash and inventory in Figma might not seem like much for a company with a market capitalization of $138 billion. The problem here is that analysts feel that Adobe has overpaid for Figma because it has been hungry to get back on track due to its slowdown in organic growth. catch? Adobe’s stock has already shed $35 billion of market value in the 20% segment it’s seen in the past three trading days since the deal was announced. The Figma purchase has already been discounted, and it may be ready to bounce back now.
Velo3D, A, is one of the smallest stocks in Wood’s portfolio 3D printing A company that helps companies in the aerospace, aviation, industrial power, and oil and gas industries make mission-critical metal parts faster and cheaper in-house than if they ordered from third parties. Velo3D’s latest Sapphire printer uses powder layer laser fusion technology to create parts faster and cheaper than its previous model.
Velo3D is still in an early stage of its development cycle. It only generated $27.4 million in revenue this year, but expects to more than triple that $89 million this year. That shouldn’t be a problem, as it already has 95% of the 2022 top-line guidance either on file or in the order backlog. Next year should be better. Velo3D surged last week after announcing one of its biggest orders ever, the purchase of seven printers by a subsidiary of contract manufacturer Kevton Industries. The first two printers will be published in early 2023. Stock is in good condition, more than triple since it started two months ago.
One investment that stands out among Wood’s purchasing group is General Motors. Revenue has fallen in three of the past five years, for starters. She is 114 years old, and few would take that as an emerging disruptor. However, General Motors doesn’t just follow its peers in making electric versions of its classic cars.
General Motors is indeed a pioneer in the future of autonomous driving with cruise platform. It also helps get a lower-priced stock — trading at eight times delayed earnings — to help diversify the stronger octane in the rest of its investments.
Adobe, Velo3D and General Motors remain compelling growth stocks At attractive price points. Wood sees it this way. Let’s see if these moves help her turn things around.