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4 Cathie Wood Stocks That Could Deliver Bigger Gains Than Tesla

By Keith Speights and Brian Orelli, PhD - Apr 16, 2021 at 6:04AM

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And they all have one key thing in common.

Everyone knows that ARK Invest CEO Cathie Wood is a huge fan of Tesla (TSLA 1.24%). Elon Musk's company ranks as the top position in Wood's flagship exchange-traded fund, ARK Innovation ETF. But Wood also likes several healthcare stocks. In this Motley Fool Live video recorded on April 7, Motley Fool contributors Keith Speights and Brian Orelli identify four healthcare stocks that are among Wood's top holdings that just might deliver bigger gains than Tesla.

Keith Speights: All right. Let's switch to a fun story, Brian. Now, you and I, we cover healthcare. We don't get to talk about stocks like Tesla very often, we just don't. We're going to talk about Tesla, kind of.

Cathie Wood, famous investor, very well-known investor, highly followed investor. Her ARK Invest came out not long ago with a 2025 price target for Tesla that caused all kinds of controversy. It's way higher than Tesla's current price. They took a beating for predicting that Tesla's shares were going to really just skyrocket over the next few years.

But Cathie Wood also likes quite a few healthcare stocks. I'm curious, Brian. Are there any of Cathie Wood's favorite healthcare stocks that you think could deliver bigger gains than Tesla will over the next five years?

Brian Orelli: Yeah. The only one in the top holdings that I saw that I own is Vertex Pharmaceuticals (VRTX 1.96%). It's big and in cystic fibrosis. Growth has been slowing down as it will treat more patients with its different medications. It's up to maybe three to four medications depending on how you count the combinations.

It needs to find its next growth driver. There's plenty of pipeline candidates both internally developed, as well as licensed products. Among the licensed products, CRISPR Therapeutics (CRSP 4.97%) has a deal with the company. They have a treatment for beta-thalassemia and sickle cell that's already in clinical trials and has shown early efficacy, and then they have some earlier programs in Duchenne's muscular dystrophy, a disease called DM1, and cystic fibrosis.

On the rest of her list, I really like Regeneron (REGN 0.72%). It's one that I've always wished I owned, but it always seemed a little expensive. But that's the way good companies go sometimes and so sometimes, you just have to bite the bullet and buy it and I never did.

If you're going to buy a large biotech company, you want to go for one with a lot of shots on goal and Regeneron has maybe almost the most shots on goal. It's really done well. I can't even think of Regeneron drug that has actually failed. I think maybe that's one of the reasons why it's doing well, even though it's had a really high price. Valuation is just because it's had so few failures, it's done really well at developing antibodies and being successful at that.

Anything on the list that you saw?

Speights: Yeah. First, I would agree with you on both Vertex and Regeneron. The tickers there by the way are VRTX for Vertex and REGN for Regeneron. Yeah. When you're looking at big biotechs, those two are my favorites.

Like you Brian, I own Vertex. I don't own Regeneron, but also like you, I wish I had bought it several years ago. Those are great picks that I do think both of those depending on how their pipeline candidates play out over the next few years, both of those stocks could potentially beat Tesla.

I also like and own Teladoc Health (TDOC 4.88%). Ticker there is TDOC. That's another Cathie Wood favorite that she is very bullish on. I think Teladoc Health has been beaten down quite a bit over the last couple of months, but I think it's a stock that could very easily outperform Tesla over the next five years as virtual care really gains momentum.

I will throw in a much riskier stock that I don't own, but just I've started doing a little research into. It's a stock called Twist Bioscience (TWST 6.06%). The ticker there is TWST. What Twist does is it makes synthetic DNA. The company offers next-generation sequencing products. It develops antibodies for biopharma companies, it's working on storing data and DNA.

The market cap right now is only around $6 billion. They generated revenue of $90 million last year. It's priced at a premium, but investors are expecting great things from Twist Bioscience. Again, it's one of Cathie Wood's favorite biotech stocks and it's one that, like I said, is really risky, but it could pay off over the long run. It's one that I'm keeping my eye on.

Orelli: Twist just came on to my watchlist like in the last week.

Speights: Yeah.

Orelli: Because it was spurred on by this podcast. Luke Timmerman does a podcast called The Long Run, and the CEO, Emily Leproust was on the podcast. I'll put that link to that podcast in the chat. If anybody wants to get more information on Twist and what they're doing, I think that was a really interesting podcast.

Speights: Maybe sometime in the not-too-distant future, Brian, you and I can go a little deeper, dive into Twist Bioscience just to give our viewers more information about this biotech that's on both of our watchlists right now.

Orelli: Yeah, that sounds good.

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Stocks Mentioned

Twist Bioscience Corporation Stock Quote
Twist Bioscience Corporation
$37.08 (6.06%) $2.12
Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$287.32 (1.96%) $5.53
Tesla, Inc. Stock Quote
Tesla, Inc.
$681.79 (1.24%) $8.37
Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
$595.40 (0.72%) $4.27
Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
$34.83 (4.88%) $1.62
CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
$63.79 (4.97%) $3.02
ARK ETF Trust - ARK Innovation ETF Stock Quote
ARK ETF Trust - ARK Innovation ETF
$41.22 (3.36%) $1.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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