Betting big on the future is not easy. Investing guru Cathie Wood attempts to discern the big ideas that will shape tomorrow and acts on them by buying large tranches of stock for her Ark Invest family of exchange-traded funds (ETFs).
It requires having a stoic constitution because it means being willing to endure extended periods of underperformance until the stock market catches up with your vision. So far in 2024, most of Wood’s ETFs are losing to the S&P 500 by a wide margin. It doesn’t necessarily mean Wood is wrong; she could be early.
The money manager shares her every trade in a rare bit of transparency on Wall Street. Below are three Cathie Wood stock picks she sees as the big winners for tomorrow.
Tesla (TSLA)
No one is surprised Wood continues to buy Tesla’s stock (NASDAQ:TSLA). Few money managers have been more bullish about the electric vehicle (EV) stock than Wood, who famously has a $3,000 per share price target on the stock that still maintains.
It’s not that Wood expects Tesla to hit that target tomorrow or even this year. It’s a few years into the future, though it still seems hard to see how the EV stock will achieve it.
Tesla stock is down 28% in 2024 as the EV market cools. However, it bounced recently from the news of a new lower-cost EV coming to market — the weight of an industry about to go into decline pressures any hope for a stock turnaround.
U.S. EV sales only grew 2.6% in the first quarter and were sharply lower (15.2%) compared to the fourth quarter. It suggests 2024 could be the first time fewer EVs were sold than the year before. Tesla faces growing competition, particularly in China so that more companies may be chasing fewer customers. As one of the few profitable EV companies, Tesla will be one of the last men standing, but it will be a difficult road to the kind of appreciation Wood foresees. The EV stock is the biggest holding in her portfolios, accounting for almost 9% of the total.
10X Genomics (TXG)
Wood has been a big buyer of gene sequencing equipment maker 10X Genomics (NASDAQ:TXG). As the life sciences technology company’s stock has fallen in value, Wood has been scooping up shares. The stock has lost half its value so far this year.
10X Genomics is one of those positions Wood believes will be huge in the future. She sees gene therapy as one of those areas with huge potential. It is featured prominently in her Big Ideas 2024 paper, which outlines the sectors that should drive the future. The company’s equipment for single-cell and spatial biology helps researchers “understand biological systems at a resolution and scale that matches the complexity of biology.”
Wood bought 320,000 shares on May 1, though those purchases were part of a larger pattern of building her position back up. Her Ark ETFs own 6.59 million shares, or almost 2.5 times the number the funds held back in October when she began a massive buying campaign. 10X Genomics, though, only accounts for 1.5% of her holdings.
Meta Platforms (META)
Wood recently took a renewed interest in Meta Platforms (NASDAQ:META), buying over $4 million worth of stock, or nearly 9,000 shares across several ETFs. It’s not a bad bet. The stock tumbled hard after the social media stock reported first-quarter results that beat analyst expectations.
Yet there was much to like in the report beyond the earnings beat, particularly as advertising dollars flooded back into the company. What spooked investors, though, was CEO Mark Zuckerberg committing to spending billions of dollars on AI. They remember all too well the spending spree he went on with the metaverse and are fearful of a similar result. The metaverse play has cost Meta Platforms $45 billion so far and counting. They don’t want a repeat performance.
Still, Wood has a small position, not much more than 10X Genomics. Across her Ark Invest ETFs, Meta Platforms represent just 1.690% of the total, good enough to rank 17th overall.
On the date of publication, Rich Duprey did not hold (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.