Last year was a tough one for investors. Navigating a highly volatile stock market amid the economic fallout of the COVID-19 pandemic made for a rollercoaster of emotions. But even in this challenging environment, some investors managed to perform extremely well. Case in point: Cathie Wood, founder and CEO of investment management firm ARK Investment Management, posted impressive returns for all five of her company's actively managed exchange-traded funds (ETFs) during the calendar year 2020.
In fact, each more than doubled last year, while the S&P 500 only climbed by a comparatively meager 16.3%. Was this performance just a fluke? Regardless of where you stand on that question, some of Cathie Wood's ETFs feature excellent stock picks that could keep winning for many years to come. Two that deserve a mention are CRISPR Therapeutics (CRSP 2.46%) and Shopify (SHOP 1.73%). Here is why both companies deserve a place in your portfolio.
1. CRISPR Therapeutics
Clinical-stage biotech CRISPR Therapeutics has a lot going its way. The company focuses on developing gene-editing therapies. Without going into the complex scientific details, these treatments seek to replace the defective gene responsible for a medical condition with its healthy version. This innovative method could allow scientists to develop effective therapies for illnesses that have thus far eluded them.
Arguably the most promising candidate in CRISPR Therapeutics' pipeline is CTX001, a potential treatment for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT). Both of these are rare and potentially deadly blood disorders that typically require blood transfusions or stem cell transplants as treatment options. However, there are serious risks associated with both of these treatment methods.
CTX001, a potential one-time curative treatment, has already shown promise in a phase 1/2 clinical trial. Seven TDT patients were transfusion independent three to 18 months after being treated with the gene-editing therapy, and all of them had normal or near-normal hemoglobin levels. Hemoglobin is a protein in red blood cells that carries oxygen around the body; TDT typically leads to low levels of hemoglobin.
Meanwhile, three SCD patients treated with CTX001 remained free of vaso-occlusive crises (VOCs, a common side effect of SCD characterized by acute pain) three to 15 months after treatment. These results are very encouraging, although there remains a long road ahead for CRISPR Therapeutics. The company does have many other pipeline products, including potential treatments for multiple myeloma and solid tumors, among others.
CRISPR Therapeutics' stock has taken a beating recently, with its shares plunging by 20.5% since the beginning of the year. Given the company's exciting pipeline candidates, it is worth seriously considering adding shares of this biotech stock to your portfolio.
Tech giant Shopify has handily beat average stock market returns since it went public on May 21, 2015. If you'd invested $10,000 in the company on that date, your investment would be worth a little over $446,100 today, a total return of about 4,361%. Despite this insane performance, it isn't too late to get in on Shopify; here are two reasons why. First, the tech company is currently riding an important long-term trend: the growth of the e-commerce space.
Shopify helps small and medium-sized business owners build an online presence, and as more retail transactions shift from traditional brick and mortar stores to online ones, entrepreneurs will increasingly seek precisely the services Shopify offers. According to consulting firm Grand View Research, the e-commerce market will expand at a compound annual growth rate (CAGR) of 14.7% between 2020 and 2027 and will be worth $27.15 trillion at the end of this period, up from $10.36 trillion in 2020.
Shopify's own subscriber count has grown tremendously in recent years. As of its fourth quarter of 2020, which ended on Dec. 31, 2020, the company had 1.7 million merchants on its platform, up from 820,000 as of the fourth quarter of its fiscal year 2018. With that said, the e-commerce space is highly competitive.
Can Shopify continue to perform well amid a sea of challengers? This brings us to the second reason it isn't too late to get in on Shopify: the company's growing competitive advantage. Shopify provides a suite of interconnected services to merchants on its platform, from payment processing to shipping and fulfillment solutions, and many more. After having built a storefront on Shopify's platform -- and relying on the tech company's services to attract and retain its clientele -- a business owner isn't likely to jump ship to one of Shopify's competitors as that would require rebuilding from scratch. That's why the tech company is likely to retain much of its clientele while it continues adding new merchants.
Both of these factors considered, Shopify still looks to have a long runway for growth, and those who get in on the tech company today will likely be glad they did so down the road.