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Did You See What Cathie Wood Bought on Wednesday?

By Rick Munarriz – Jul 22, 2021 at 11:40AM

Key Points

  • DraftKings gives ARK Invest more exposure to the fantasy sports and sportsbook markets.
  • Fate Therapeutics has several potentially game-changing cancer immunotherapies in early-stage clinical trials.
  • Zoom Video has fallen out of favor with investors, but its business is still growing at a rapid clip.

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ARK Invest added to its stakes in DraftKings, Fate Therapeutics, and Zoom Video, all of which are trading well below their recent peaks.

Rock-star money manager Cathie Wood makes it easy for the rest of us to see what's in her shopping bag. She posts nightly buy and sell transaction reports across all of her ARK Invest exchange-traded funds, and it's always interesting to see which names are becoming a bigger part of her firm's portfolios and which names are going the other way.

On Wednesday, she added to her existing positions in DraftKings (DKNG 0.14%), Fate Therapeutics (FATE -0.37%), and Zoom Video (ZM 1.20%). Let's see why these are three stocks worth getting excited about. 

A person holding up twenty-dollar bills in front a Welcome to Fabulous Las Vegas sign.

Image source: Getty Images.

1. DraftKings

Sports fans are generally overconfident about two things. They think that this will be the year when their favorite team wins it all. They also think they're better than the average spectator at sizing up individual performances and determining which team will come out on top in any given contest. 

DraftKings has historically focused on player-centric scenarios. It's a leader in fantasy sports, where its users compete for cash prizes by attempting to single out the top daily performers among athletes. But that's a natural gateway to offering a full-blown sportsbook where folks can wager on actual game outcomes. 

DraftKings rocked in 2020, even as many sports leagues were dealing with abridged seasons and uncertain player statuses under the cloud of COVID-19. Its revenue soared 90%, accelerating to a 253% year-over-year burst in Q1 2021, its most recently reported quarter. That year-over-year comparison was easy given that the sporting world went on ice in mid-March 2020. Analysts still forecast a hearty 88% top-line increase for all of 2021. The stock is trading 34% below its springtime highs, making it an opportunistic purchase.

2. Fate Therapeutics

Fate Therapeutics is another disruptive company that's currently out of favor on Wall Street. The leader in next-gen immunotherapies for cancer treatment is trading nearly 30% below the all-time high it hit six months ago.

The patent-rich company has eight immunotherapies in the early phases of clinical testing. The next big expected news event from Fate is due in late August, when it will highlight interim trial data from a pair of phase 1 clinical studies of its lymphoma-tackling immunotherapies. The payoff for investors here will require patience; for now, this stock is naturally going to rise and fall depending on how its candidates fare in trials. Fate Therapeutics' $7.4 billion market cap may seem high for a company generating negligible revenue, but even a single immunotherapy success could generate billions in valuation. 

3. Zoom Video

DraftKings at a 34% discount and Fate Therapeutics at a 29% markdown from recent highs have nothing on Zoom Video. The original pandemic play is trading 40% below its peak. 

The appeal of Zoom is that it's not really going away. Its revenue nearly tripled year over year in its latest fiscal quarter, and that was with schools, company meetings, and socializing starting to bring people together in real-world scenarios again. Zoom's profitability is growing even faster, given its scalable high-margin business model. 

Zoom stock may be out of favor right now, and even a big-ticket acquisition it announced earlier this month didn't go over too well with investors. However, it's hard to deny that Zoom will continue to be a part of our lives in some shape or form in the near future. You still remember your Zoom password. Right?  

Rick Munarriz owns shares of DraftKings Inc. and Zoom Video Communications. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool has a disclosure policy.

Stocks Mentioned

Fate Therapeutics Stock Quote
Fate Therapeutics
FATE
$19.05 (-0.37%) $0.07
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$73.23 (1.20%) $0.87
DraftKings Stock Quote
DraftKings
DKNG
$14.63 (0.14%) $0.02

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

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