It hasn't been an easy year for Cathie Wood to navigate. The ARK Invest founder, CEO, and ace stock picker has seen her penchant for disruptive growth stocks go unrewarded in a volatile market. But don't count her out when it comes to her chances to bounce back in 2022. Wood has an eye for next-gen leaders, and when market sentiment returns to favor this breed of growth stocks she should be leading the way just as she did in 2020.
Roku (ROKU 0.15%), Coinbase Global (COIN -5.10%), and Garmin (GRMN 0.20%) are three of the stocks that she added to on Tuesday. Let's take a closer look.
Image source: Getty Images.
Roku
One of the market's biggest surprises is that Roku is trading 55% below its summertime highs as of Tuesday's close. The country's top platform for streaming video services from a TV -- with nearly double the market share of its nearest competitor -- even turned a headwind into a tailwind when it extended its app deal with YouTube and YouTube TV last week.
Roku isn't showing any signs of fading away. Platform revenue soared 82% in its latest quarter. Hardware revenue is going the other way, but rising costs and supply chain constraints are making it challenging for any company to get their TV dongles out there. It certainly helps that Roku is now the factory installed default operating system in 38% of the smart TVs shipping in this country.
Roku's monetization keeps improving. Advertisers are willing to pay more for access to consumers through connected-TV marketing. Roku is also helping make its platform even stickier by taking well-calculated nibbles in original programming to set itself apart from the tech giants with smaller audiences. Wood has been buying Roku on the way down, but the move could and should be rewarded once investors rally around the home video streaming market again.
Coinbase
It's also a bit stunning to see Coinbase fetching 40% less than it was when it peaked the day it hit the market in April. The leading cryptocurrency trading exchange would go on to deliver a monster quarter for its first report as a public company. It did see a sequential dip in trading activity in its subsequent report, but it's hard to be upset at a 330% year-over-year surge on the top line for Coinbase in its third quarter.
Despite its $65 billion market cap, Coinbase is cheaper than you probably think. It trades for just 13 times trailing earnings. There are some one-time items and the insane second quarter inflating the trailing results, but the multiple is still a compelling 36 times next year's projected profit.
Coinbase keeps adding digital currencies to its platform, and the scalable business model will make the already strong margins even better if crypto keeps gaining traction. Despite some knocks on the platform itself -- including high trading fees and a few untimely outages -- Coinbase continues to be the undisputed leader in this booming field.
Garmin
Wood was a seller of Garmin shares through the spring and summer, but she has added to her modest stake five times this quarter. Tuesday naturally marked the fifth purchase.
Garmin is only 25% below its earlier highs, making it a relative winner in this list of three stocks. It's still another eye-rubbing event. The stock sold off last month despite posting a "beat and raise" blowout quarter. Garmin is the top brand when it comes global positioning system devices, but it has evolved over the years through wearables and other outdoor gadgetry.
Garmin has fared well through the pandemic. Revenue rose 11% in 2020, coming through with double-digit growth in a dark year for most companies. With social distancing and outdoor workouts encouraged, folks took to running, boating, and camping -- all areas were Garmin devices are popular. Momentum is building, and Garmin now expects 18% top-line growth for all of 2021.
Roku, Coinbase, and Garmin are strong growth stocks. They happen to be trading lower than their recent highs right now, but ARK Invest's Wood is still a believer.
