Cathie Wood is back to her winning ways. Wood's flagship fund, ARK Innovation ETF (ARKK -1.65%), is up nearly 30% so far in 2023, handily outpacing the Nasdaq Composite and S&P 500 indexes.
Here are two of Wood's favorite stocks that are helping to drive ARK's returns. Both are intriguing long-term investments for you to consider buying today.
1. Roku
Roku (ROKU -1.90%) is one of ARK Innovation's largest positions. The streaming leader accounts for nearly 7% of the ETF's investment portfolio -- and its stock price is up more than 40% so far this year.
Roku aggregates streaming services on one convenient platform. People viewed over 87 billion hours of content on Roku in 2022, a total up 19% from the prior year. Advertising dollars follow eyeballs, so they're increasingly flowing to Roku's ad network.
New partnerships with streaming providers, such as the one Roku recently struck with Warner Bros. Discovery, are bringing more popular shows to its platform. More content means more streaming hours viewed -- and more ad spots that Roku can sell to marketers.
Roku also announced the launch of its own line of TVs last month. The company is integrating its popular streaming software with innovative hardware features to create an affordable, top-notch user experience. These new smart TVs should help to expand Roku's market share.
In their Big Ideas 2023 report, ARK's researchers noted that approximately 85% of U.S. households have at least one internet-connected TV, but the ad market for connected TV is less than a quarter of the size of total U.S. TV ad spending. Cathie Wood and her team expect this gap to close as providers of streaming ad solutions steadily wrestle market share away from traditional TV marketers in the coming years.
Roku CEO Anthony Wood is even more bullish on the industry's long-term prospects. "The world is moving to streaming," he said during an interview with CNBC in January. "All TV is going to be streamed; that means all TV advertising is going to be streamed." Roku stands to benefit from this megatrend more than perhaps any other company, which makes it a great stock to buy today.
2. Tesla
Tesla (TSLA -2.71%) is ARK Innovation's biggest holding. The electric vehicle leader accounts for more than 10% of the fund's portfolio. It's also a major driver of ARK's impressive gains in 2023. Tesla's stock price is up a stunning 63% so far this year.
Wood is an ardent Tesla bull. She's also adamant about the jaw-dropping growth potential of the electric vehicle (EV) market. ARK's analysts project that EV sales will soar more than sevenfold to 60 million units by 2027, fueled by falling battery costs and, in turn, lower vehicle prices.
Wood is also intrigued by Tesla's artificial intelligence and data analytics capabilities. With its vast pool of real-world driving data, Tesla has an opportunity to create a leading autonomous taxi platform, according to Wood. Ark's research team believes autonomous ride-hailing services could eventually become a massive $11 trillion market.
If ARK is even remotely accurate with these grand predictions, Tesla has a huge runway for growth still ahead. The EV titan's revenue surged 51% to $81.5 billion in 2022, while its net income soared 128% to $12.6 billion.
Tesla expects to produce 1.8 million EVs in 2023, up from 1.3 million last year. Yet despite this rapid pace of expansion, Tesla's sales still represent just a small fraction of what Wood believes they can reach in the coming years. Buy shares today, and you can position yourself to profit alongside ARK as the EV leader works to fulfill its terrific growth potential.
