Cathie Wood kicked off the new trading week looking to shake things up. The co-founder and CEO of Ark Invest added to 11 of her existing positions. She's had a rough start to 2024, but anyone who saw her breakthrough performance in 2020 knows that you never count Wood out.
Wood bought shares of Palantir Technologies (PLTR 1.50%), Meta Platforms (META -0.52%), and Qualcomm (QCOM 0.63%) on Monday, building up some of her largest positions. Let's take a closer look at these three purchases.
1. Palantir
One of last year's hottest stocks got off to a strong start through the first two months of 2024. Palantir was nearly a four-bagger in those 14 months, up a wealth-altering 291%. With shares of the software developer for the intelligence community moving lower for the second month in a row, Wood is a buyer.
She's not the only one who sees this as a potential buying opportunity. The once-bearish Monness Crespi upgraded Palantir on Friday, boosting its rating from sell to neutral. With Palantir a week away from announcing its first-quarter results, the timing of the upgrade is noteworthy. The company's execution and government contracts remain spotty, and the stock isn't cheap. But with the shares pulling back in recent weeks, Monness Crespi isn't comfortable going into Palantir's upcoming financial update with a bearish rating.
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Expectations are high for Palantir. Analysts see revenue rising 19% to $625.3 million for next week's first-quarter report. They also see Palantir's earnings per share soaring 60% to $0.08. Those are ambitious targets, but reality has been more than up to the task, as Palantir has posted double-digit percentage beats on the bottom line in three of the past four quarters.
Momentum is on Palantir's side despite the recent downticks. After three years of decelerating top-line growth, Wall Street pros see the top line accelerating in 2024. Why? In part because after a long history of serving the the U.S. military and Western allies with its big data analytics, Palantir is gaining ground with private companies. U.S. commercial revenue rose 36% last year, more than double Palantir's overall growth in 2023. That's just a fifth of the revenue mix at Palantir, but it's a segment that could be at the heart of the accelerating revenue in 2024.
2. Meta Platforms
Meta is another stock that nearly tripled in 2023, roughly quadrupling in the 14 months through end of February before sliding March and April. The parent company of Facebook, Instagram, and WhatsApp saw its stock tumble 15% after posting mixed financial results last week.
The first quarter itself was solid. Revenue growth accelerated 27% through the first three months of the year, up from a 22% increase in the fourth quarter of last year. Earnings also topped analyst profit targets. It was Meta's uninspiring guidance that tripped up the bullish narrative.
The sell-off seems like a dinner bell. Meta continues to be a master of monetizing social media platforms, and if rival TikTok is banned in the U.S., it will only drive that app's young user base to one of Meta's digital watering holes. The stock is also cheaper than you might think for a stock that's up 269% in the past 16 months. Meta is trading for a reasonable 23 times this year's projected earnings and 20 times next year's market forecast. Put another way, you could've bought Meta at the beginning of last year for just six times what it's likely to earn in 2024.
3. Qualcomm
Qualcomm isn't like Palantir and Meta. The patent-rich designer and provider of chips and software found in mobile devices, wireless networks, laptops, and other gadgetry didn't see its stock nearly triple or even double last year. It has struggled with growth lately, though its shares are trading nicely higher since the end of February. And unlike with Palantir and Meta, which are among Ark Invest's 18 largest collective holdings, Wood has a much smaller stake in Qualcomm.
It's also reporting fiscal second-quarter results later this week. Investors aren't holding out for much. The consensus estimate calls for a 6% decline in revenue and flattish bottom-line growth. Qualcomm has rattled off three quarters of accelerating bottom-line beats and a forward earnings multiple in the high teens, and it's close to revisiting the all-time highs it reached two years ago. A surprisingly strong report on Thursday afternoon can help make that happen.
