When Cathie Wood talks, people listen. And when she buys stocks, people pay attention.
That's not surprising. Wood's ARK exchange-traded funds (ETFs) have been huge winners in recent years. Wood has become one of the most-followed investors around. Some have speculated that she could be the next Warren Buffett. Others have called her the "anti-Warren Buffett" because of her strikingly different investing style from that of the Oracle of Omaha.
You could simply invest in one of the ARK ETFs to benefit from Wood's stock-picking prowess. Another route, though, is to buy shares of individual stocks favored by Wood. Here are three stocks Cathie Wood really likes that should make you rich over the long run.
There's a revolution going on in the financial world. And Square (SQ -4.25%) stands as a leader in that revolution. The stock ranks as the top holding in Wood's ARK Fintech Innovation ETF and the second largest position in the ARK Innovation ETF.
Square achieved its initial success by providing payment processing services to small- and medium-sized businesses. Over time, the company expanded its products and services to include point-of-sale software, an e-commerce platform, payroll services, business debit cards, and more. As of this month, Square also now operates a federally chartered bank. This opens the door for Square to provide small-business loans to its customers.
The company's biggest growth driver, though, is its Cash App digital wallet. In the fourth quarter, over 36 million customers were active users of Cash App -- 50% more than in the prior-year period. Square has steadily added to the features available on Cash App, making it increasingly popular for individuals to conduct a wide range of financial transactions.
The shift from cash to digital payments is still only in its early stages. Square is poised to grow much larger with both its seller and Cash App ecosystems -- and make investors a lot of money along the way.
Is Cathie Wood worried about the threat Amazon.com might pose for Teladoc Health (TDOC -0.52%)? Not a bit. She loaded up on more shares of Teladoc after Amazon recently announced plans to compete in the telehealth market. Teladoc is currently the No. 1 position in the ARK Genomic Revolution ETF and the fourth-biggest holding in the ARK Innovation ETF.
There's a good reason Wood likes Teladoc so much. The company is the global virtual care leader. Over 40% of the Fortune 500 use Teladoc Health's services. Teladoc provides a more comprehensive product offering than any of its rivals.
The growth prospects for Teladoc are fantastic. The company has nearly as many potential users at existing clients as it does members. Teladoc's acquisition of Livongo Health, which operates a digital health platform that helps individuals manage chronic conditions, gives it significant cross-selling opportunities.
McKinsey and Company predicts that the U.S. virtual care market will reach close to $250 billion annually. The number is even bigger including international markets. Teladoc's market cap stands below $30 billion. This Cathie Wood favorite has plenty of room to run.
Vertex Pharmaceuticals (VRTX 1.23%) ranks as the sixth-largest holding in the ARK Genomic Revolution ETF. It arguably has the strongest moat right now of any of the top stocks in Wood's ETFs.
The big biotech doesn't have any rivals in its core market. Vertex's four approved cystic fibrosis (CF) drugs are the only ones that treat the underlying cause of the genetic disease. The closest potential competitors are currently evaluating experimental CF therapies in phase 2 testing.
Vertex is also leveraging its expertise in CF to target other rare genetic diseases. It expects to report key results from a phase 2 study evaluating VX-864 in treating liver disease alpha-1 antitrypsin deficiency within the next few months. The company's pipeline also includes candidates targeting rare blood disorders beta-thalassemia and sickle cell disease (with its partner CRISPR Therapeutics) and rare kidney disease focal segmental glomerulosclerosis.
In addition, Vertex has a potential game-changer that just advanced to a phase 1/2 study. Cell therapy VX-880 just might be able to enable patients with type 1 diabetes to live insulin-independent if it succeeds in clinical testing.
Vertex has a $6.6 billion cash stockpile that it plans to use in scooping up mid-to-late-stage candidates to beef up its pipeline even more. I think this biotech stock should continue to be a big winner for years to come.