The Ark Innovation ETF (ARKK -2.38%) has been performing dreadfully this year, down 53% thus far. That's much worse than the S&P 500 and its 19% loss. The fund's focus has been on growth-oriented companies, many of which aren't posting strong and consistent profits. And as investors have been worrying about a possible recession, they've been moving away from such stocks.
The three stocks that are the Ark's best holdings right now are CRISPR Therapeutics (CRSP -0.61%), Cerus (CERS -1.37%), and Signify Health (SGFY). The one thing these stocks have in common: They're all in the healthcare industry.
1. CRISPR Therapeutics
Shares of CRISPR Therapeutics are down a very modest 2% this year. You could argue that after a hefty 50% drop in 2021, it may have bottomed out. However, there are also reasons now to be bullish on this growth stock.
The company is collaborating with Vertex Pharmaceuticals on a gene-editing therapy, exa-cel, which treats blood disorders beta thalassemia and sickle cell disease. It's an opportunity that can be worth billions, with approximately 32,000 patients who could benefit from the treatment. The companies plan to file for approval of the treatment with regulators later this year.
CRISPR will receive 40% of the profits, and it could add some stability to the business. Currently, the company's revenue fluctuates due to collaboration and grant revenue. In the first three months of this year, its top line totaled just $940,000 and its net loss was $179.2 million.
Until the approval comes in, there's going to be some elevated risk with CRISPR. The good thing is the company has tons of cash and short-term investments on its books -- totaling $2.2 billion. There's no urgency, and investors may be feeling that there could soon be some more optimism ahead for the business. If you're willing to take on some risk, this may be a good buy.
Cerus is a biomedical company that has proprietary technology, its Intercept Blood System, which helps to minimize the pathogens in blood components that are used for transfusions. Its system is critical in keeping people safe, and the advantage it has over some of its competitors is that it can be used in blood centers. That allows it to integrate with blood collection and make the process more efficient and reduce the need for shipping and transporting products.
The business expects to generate product revenue growth of between 22% and 26% this year, potentially reaching $165 million. At a time when companies are cutting back and worried about declines, Cerus has remained a promising growth stock. Although it isn't profitable just yet, the company's losses have been shrinking. Through the period ended March 31, Cerus reported a net loss of $12.3 million, compared with a loss of $17.5 million in the prior-year period.
Down 17% this year, Cerus hasn't performed all that well. But it's still better than most Ark stocks and could make for a promising long-term investment.
3. Signify Health
The top-performing stock on this list is Signify Health. Its 7% gains are impressive, and that's even after factoring in a recent decline. The value-based care company looks to help keep costs down in the healthcare industry through its in-home health evaluations (IHEs). Working with Medicare Advantage and other managed care plans, its licensed clinicians help assess individuals so that outcomes and financial incentives are aligned.
The business sees a large addressable market for its services, noting that it only conducted 1.9 million IHEs last year and there are 84 million members who are in Medicare Advantage and Medicaid Managed Care who it could help serve. Signify has been growing at a compound annual growth rate of 24% over the past few years. This year, it projects its sales to come in between $948 million and $971 million.
The one caveat for investors is that Signify's stock isn't cheap; it trades at 40 times forward 12-month profits. While it has been doing well this year, it may not necessarily be a slam dunk to be a good buy at its current price.