Growth stocks are back in fashion, and Cathie Wood is diving in. The CEO of Ark Invest looks for aggressive growth stocks for her exchange-traded funds. Her style paid off in 2020, but backfired badly in 2021 and 2022. She is hoping to catch 2020 in a bottle again this year.
What's she picking up these days? Wood added to her existing positions in Coinbase Global (COIN -5.75%), Rocket Lab (RKLB 1.84%), and Cerus (CERS -1.16%) on Tuesday. Let's look at a closer look at the stocks she is buying.
Coinbase Global
One of this young week's biggest losers is Coinbase. The leading cryptocurrency exchange has plummeted 20% over the first two trading days of the week.
The stock initially took a 9% hit on Monday after the Securities and Exchange Commission charged Coinbase rival Binance with a variety of securities law violations. A competitor taking a hit is typically an opportunity for everyone else, but investors were concerned that the regulatory agency cracking down on a peer was a bad sign for all crypto platforms. Those fears were realized when Coinbase itself was in the crosshairs, charged by the SEC for operating as an unregistered exchange and broker a day later. Coinbase stock would go on to take an even bigger 12% drop on Tuesday.
Image source: Getty Images.
The good news for Coinbase investors is that the shares are still trouncing the market this year, up 46% in 2023 despite this week's slide. When the top crypto denominations started to bounce back this year, Coinbase took off despite the problematic industry that had already claimed a couple of popular trading platforms.
Unfortunately this looks to be a prolonged battle breaking out with the SEC. Coinbase will be even more of a headline risk at this point, but that apparently didn't frighten Wood. Coinbase has become the fifth-largest holding across Ark Invest's portfolios, and she doesn't tend to shy away whenever there's a fire sale.
Rocket Lab
Is Rocket Lab finally ready to take off? TD Cowen analyst Cai von Rumohr boosted his price target on the space exploration specialist from $8 to $9.50, suggesting the shares can nearly double from current levels. Rumohr feels it can gain market share given its track record of successful launches stacked up against recent competitor launch failures.
The space race is real, and Rocket Lab is generating real revenue. Profitability is what seems so far away for many players in this nascent niche, but there is a light at the end of the launch tunnel for Rocket Lab. Analysts see it generating positive income on an adjusted basis as early as 2025 with reported profitability following the year after.
Rocket Lab has launched dozens of successful missions. Its Electron is the only U.S. commercial small launch vehicle to successfully deploy satellites to orbit in 2023. Wood is a fan of the space race, and Rocket Lab is well positioned to survive the inevitable shakeout.
Cerus
After six consecutive years of top-line growth of 17% or better, Cerus is starting to prove mortal. Revenue declined 17% in last month's first-quarter report, ending its streak of 23 straight quarters of year-over-year growth.
Cerus is a biotech stock working on blood safety through its Intercept platform, which reduces pathogen loads in different blood components. With a $439 million market cap, it's one of the smaller companies in the Ark Invest portfolio.
Its latest quarter was rough, and it wasn't just the top-line slide. Cerus has now posted larger losses than expected on the bottom line in back-to-back reports. Cerus feels that it has cleared the headwinds from earlier this year. It sees a return to revenue increased for the balance of 2023. On Monday it was awarded an $8.7 million Department of Defense contract for a treatment in cases of traumatic injury bleeding. The amount may not seem like much, but it could move the needle given the size of Cerus.
