Cathie Wood favors companies that innovate and have what it takes to become tomorrow's winners. But she won't buy them at just any price. The superstar investor will only pick up shares of these players if the price is reasonable -- and even better if it's an absolute steal. A stock that's declined in the double digits doesn't intimidate Wood because she invests for the long term, with the idea that companies will score earnings and share performance down the road.
This year, Wood's strategy has helped her flagship Ark Innovation ETF outperform the S&P 500, with a gain of 27% compared to the index's 15% increase.
So, how can you win over time like Wood? A great way to start is by following her into a few exciting stock market stories. Just recently, she bought shares of Moderna (MRNA 1.55%), Intuitive Surgical (ISRG 1.48%), and Ginkgo Bioworks (DNA +6.56%) -- and these bargain buys should be on your list too.
Image source: Getty Images.
1. Moderna
Today, we all think of Moderna as a coronavirus vaccine company. The vaccine, Moderna's only product, has brought in billions of dollars in earnings since early pandemic days.
Now, with vaccine demand on the decline, many investors have fled Moderna shares. But Wood has done just the opposite because she knows the biotech is heading for a whole new era of growth -- that won't depend on just one product.
NASDAQ: MRNA
Key Data Points
Moderna has several candidates in late-stage development, meaning they've passed many safety and efficacy hurdles, and aims to launch possibly 15 new products over the coming five years. And these products could generate $30 billion in revenue a few years after launch. That's compared to the coronavirus vaccine's peak revenue of about $18 billion last year. So not only does Moderna offer top growth prospects, but it also offers you less risk today thanks to many potential revenue sources.
So, trading for only 8 times forward earnings estimates, Moderna looks dirt cheap.
2. Intuitive Surgical
Intuitive Surgical is the global leader in robotic surgery by far, and the company boasts a significant moat, or competitive advantage, thanks to two elements. First, surgical robots represent million-dollar investments, so it's unlikely hospitals will easily switch in and out of brands. Second, most surgeons train on Intuitive's Da Vinci robot, so they probably will support the idea of continuing with that product.
Another thing to like about Intuitive is the fact that it actually generates more revenue from sales of instruments and accessories needed to perform each procedure than from sales of the actual robotic platforms. This is great because it means each installed system represents significant recurrent revenue.
Intuitive repurchased shares earlier this year, a move that signals confidence in its future, and finished the recent quarter with an increase in cash to more than $7.5 billion.
The stock is trading for 49 times forward earnings estimates, lower than in the past, yet revenue has continued to climb -- making this a bargain stock to pick up now.
ISRG PE Ratio (Forward) data by YCharts
3. Ginkgo Bioworks
Ginkgo Bioworks, through its foundries, has scaled the engineering of organisms to be used in many industries -- from drug discovery to agriculture. The company is in the early stages of its growth story, so it's lack of profitability isn't surprising, but it has weighed on the stock's performance.
NYSE: DNA
Key Data Points
If you're a cautious investor, this stock may not be the best choice for you -- but if you can handle some risk, you may want to scoop up a few shares right now as they trade for just over $1.
Why bet on Ginkgo? The company may become a key player in the development of better drugs down the road. Ginkgo just recently signed a partnership with Pfizer -- the big pharma company will use Ginkgo's technology to advance the discovery of RNA therapeutics. The deal could be worth as much as $331 million for the organism specialist.
Pharma and biotech represent a key growth area for Ginkgo, with 42 active programs in the third quarter, up by 50% from a year ago.
So right now is a great time for aggressive investors to follow Cathie Wood and bet on this innovator.
