The last year and change has been rough for the growth investing style that Cathie Wood has championed, but it doesn't mean that her head-turning run in 2020 was a fluke. The co-founder, CEO, and stock shopper of the Ark Invest exchange-traded funds (ETFs) keeps buying disruptors on the cheap. When the tide turns, she should be ready to surf.
What is she buying these days? Wood kicked off the new trading week by adding to her existing stakes in Velo3D (VLD -4.52%), DraftKings (DKNG -1.40%), and Nvidia (NVDA 2.48%) on Monday. Let's see why she's building up her stakes in these three names.
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Velo3D
Let's start with the more obscure name from Monday's shopping list. Velo3D is small player making big things for a small niche. It's a 3D printing company with a platform that helps companies with heavy machinery make mission-critical metal parts faster and cheaper than the old-school way of ordering them from third parties. Velo3D has been lining up customers in the aerospace, aviation, industrial power, and oil and gas industries, but it's still early in its growth cycle.
Velo3D has just $51 million in trailing revenue, but its momentum is rolling. It reaffirmed last month that it expects to score $89 million in revenue this year, up from the $27.4 million it recorded in 2021. It shouldn't have a problem getting there, as earlier this summer it already had 95% of its full-year revenue guidance either recorded in the first half of the year or in its order backlog. Analysts see $148 million on the top line next year. Profitability isn't there, but it has time to figure that out with its cash-rich balance sheet.
Velo3D is one of the smaller stocks that Wood owns. It represents a small position in the Ark portfolio, but the fund manager owns a 6.2% stake in Velo3D. The stock has more than tripled since bottoming out earlier this year, but it's still way below last year's highs.
DraftKings
Wood is betting big on DraftKings. She has added to her position on six consecutive trading days. Is she eyeing the start of the college and pro football seasons as a catalyst, with the NBA tip-off a month away? She might like what she sees in the leader of fantasy sports and online gambling in a time when more states are opening up opportunities for wagering on sports.
The platform keeps growing. It had a monthly average of 1.5 million unique paying customers in its latest quarter, 30% more patrons than it was serving a year earlier. They're also spending more on the platform. Average revenue per user has also risen 30% over the past year, and those two figures stack up nicely. Revenue rose 57% in its latest quarter, and DraftKings boosted its full-year guidance.
Nvidia
Nvidia was a market darling for savvy growth investors a year ago. The company had its pulse on many of the tech world's booming trends, covering everything from self-driving cars to virtual reality. Today's reality has been a bit of a wipeout. The stock has surrendered more than 60% of its value since peaking last November.
It's fair to say that Nvidia is going through some growing pains. Revenue rose just 3% in its latest quarter, and things will get worse. Its guidance calls for a 17% year-over-year decline for the current quarter. Investors who thought they were thinking ahead by buying Nvidia as a way to cash in on emerging trends aren't feeling so hot right now, but it doesn't mean that they are wrong. Nvidia is still a leader. It just needs the global marketplace to work its way through recent macro hiccups before getting back on track.
Velo3D, DraftKings, and Nvidia are all trading well below their highs, but they're all still compelling growth stocks at attractive price points. Wood sees it that way. She only bought five stocks on Monday, and these were more than half of them.
