No investor, no matter how savvy or experienced, gets it right every time. But over the years, some do become successful and recognized after displaying above-average stock-picking abilities. Cathie Wood is such an example. The famed CEO of Ark Invest, an investment firm, is considered a star on Wall Street.
Many of her firm's actively managed ETFs are performing well this year, so it might be a good idea to take a peek inside and use her stock picks for inspiration. Two that stand out due to terrific performances this year are Exact Sciences (EXAS 0.10%), up 35%, and Roku (ROKU -10.29%), up 70%.
Despite crushing the markets, these Cathie Wood stocks still have plenty of upside for long-term investors. Let's dig in.
1. Exact Sciences
Every great company has a purpose. Whether Exact Sciences qualifies as "great" is debatable, but the company's goal to end cancer certainly is. The company's strategy is to develop diagnostic tests that help identify cancer early when it is much more treatable.
How is Exact Sciences doing so far? The company's most important product is Cologuard, a non-invasive test for the detection of colorectal cancer -- the second-leading cause of cancer death in the U.S. Cologuard was first approved in the U.S. in August 2014. It took Exact Sciences less than four years to reach the milestone of having tested 1 million patients, which it achieved in February 2018.
A little over four years later -- in October 2022 -- that number had risen tenfold. That is an impressive feat, considering that cancer diagnostics declined during the early days of the pandemic. The adoption of Cologuard is still going strong. With 60 million eligible patients still unscreened, Exact Sciences plans to cross the 30 million mark by 2027.
Here's one thing that should help: The company is developing a second-generation version of Cologuard. In addition to lowering false positive rates, a major selling point for still-reluctant patients and physicians, the new Cologuard will be cheaper to manufacture, thereby reducing Exact Sciences' costs.
Cologuard 2.0 will allow Exact Sciences' top line, which has increased at a good clip in the past, to continue growing. It should also help the company move closer to profitability.
EXAS Revenue (Quarterly) data by YCharts.
Meanwhile, Exact Sciences is developing other products, including a multi-cancer early detection platform. As the company argues, 70% of cancers have no screening options, so there is a significant unmet need here. Exact Sciences has a lot of work to do -- in fact, an infinite amount of it -- before it can hope to achieve its purpose.
But thanks to its proven innovative potential and increasingly recognizable brand as a leader in cancer testing, the company can deliver outsized returns to patient investors from here on out.
2. Roku
Many were quick to write Roku's eulogy last year as the company dealt with a barrage of economic problems. Companies strapped for cash started spending less on advertising, which reduced Roku's sales since its ad business is its most important. The streaming specialist also incurred higher expenses and costs due to inflation and supply chain issues. But the company's financial results are improving as the advertising industry is rebounding.
In the second quarter, Roku's revenue of $847.2 million increased by 11% year over year. That's not too impressive compared to the company's historical performance, but it's much better than what we saw for most of last year.
ROKU Revenue (Quarterly YOY Growth) data by YCharts.
Other key metrics for Roku are rising, including total hours viewed and active accounts. Roku initially projected revenue of $815 million for the third quarter, which would represent a 7% year-over-year growth. The company recently updated its guidance, announcing that it now expects revenue between $835 million and $875 million, up between 10% and 15% compared to last year's third quarter -- another sign of a recovering business.
So, Roku could continue to perform well in the short run. Meanwhile, the company's long-term potential remains attractive. The streaming war is in full force, but Roku doesn't need to compete directly with other content creators. True, the Roku channel is rising in popularity. As of May, it accounted for a respectable 1.1% of television viewing time in the U.S. But Roku plays host to most of the largest streaming services.
Whoever wins, Roku wins. The company's platform will only become a more attractive hub for advertisers as it deepens its engagement, which it has done consistently for years. Streaming still has a long way to go, even in the U.S., before killing cable. The long-term opportunities here are vast, and Roku will almost certainly benefit. That's why an investment in the company could make investors richer.
