Cathie Wood is trying to get her groove back. The founder, CEO, and primary stock picker for Ark Invest has been in a funk lately.
Her largest fund has fallen 10% this month heading into the final trading day of September. This follows a 13% slide in August. She's trying to return to the winning ways she rediscovered earlier this year, and that finds her making moves every trading day.
What's she buying lately? Wood added to her existing positions in Cloudflare (NET +1.75%), Beam Therapeutics (BEAM 0.14%), and Markforged Holding (MKFG +0.00%) on Thursday. Let's take a closer look.
NYSE: NET
Key Data Points
1. Cloudflare
Shares of Cloudflare have been slumping since hitting an 11-month high two months ago. The provider of edge computing services for enterprises has seen its stock slide 20% since its summertime peak. Growth is slowing, and the path to reported profitability has been rocky, but is the recent dip a buying opportunity?
Cloudflare helps enhance the site performance of its growing client base. It's a leader in this niche, reportedly serving roughly 18% of the website traffic market.
It can speed up access as an edge network but can also thwart cybersecurity threats as they arise. Cloudflare has been able to expand its offerings over time, making sure that when it gets its foot in the door of a new enterprise, it has other ways to stay there.
Image source: Getty Images.
Business is decelerating, but it's hard to be disappointed. Cloudflare has delivered four consecutive years of better-than-48% top-line growth. Its guidance for this year calls for a 31% increase, but most enterprise software companies would love to be growing revenue north of 30% in the current operating climate.
A lack of reported profitability is somewhat problematic, but the company's been in the black on an adjusted basis since last year. It has also beaten Wall Street targets for adjusted earnings by at least 42% in each of its past four quarters.
Cloudflare isn't cheap, even on an adjusted earnings basis. It also trades for a stiff 18x trailing revenue. It's still a quality company navigating some margin pressure, and Wood sees its latest retreat as a golden opportunity to add to her established position in the company.
NASDAQ: BEAM
Key Data Points
2. Beam Therapeutics
When it comes to gene editing stocks, Wood doesn't have a problem buying a basket of several emerging players instead of cherry-picking just one or two in this dynamic field. Beam Therapeutics is one of her largest holdings, even though it's still years away from generating meaningful revenue.
Despite its modest market cap of less than $2 billion, it's one of her 20 largest combined holdings across all of her ETFs. She owns more than 10% of the outstanding shares.
Beam investors will need to be patient. It has a unique approach to precision gene correction but is still early in the approval process. There could be some critical clinical updates as early as next year, but it's not until 2027 that Wall Street pros see Beam generating nine-figure revenue.
Like most early-stage biotechs, Beam will burn through a lot of money between now and then. It's one of the riskier names in Wood's already risky collection of growth stocks but also has one of the higher ceilings if its aim is true.
NYSE: MKFG
Key Data Points
3. Markforged
Wood added to just three stocks on Thursday. Markforged is the only one that she purchased for two different Ark portfolios.
The 3D-printing specialist is also one of the smallest companies Wood owns by market cap, with a valuation of merely $278 million. Wood owns more than 10% of this stock's outstanding shares.
Markforged offers a potentially promising metal 3D-printing platform for the industrial market, but growth has been unimpressive. After an encouraging 27% increase on the top line in 2021, revenue gains slowed to an 11% clip last year.
The company's guidance calls for a single-digit increase in 2023. The stock has plummeted 91% since peaking shortly after hitting the market three years ago, but Wood obviously still believes in the long-term potential of Markforged.
