Cathie Wood is hoping to end 2023 on the same market-thumping groove she had earlier in the year. It's been a good time for her style of growth investing, and she kicked off the new trading week by adding to some of her existing positions.
What is Wood buying these days? She added to her stakes in Toast (TOST 3.42%), Spotify (SPOT 0.20%), and Joby Aviation (JOBY 4.90%) on Monday. Let's take a closer look.
Toast
Cathie Wood keeps coming back to the Toast table, and she's not alone. Analysts love putting out lists of potential winners for the coming year in December, and one of them singled out the provider of payment and software solutions for the restaurant industry late last week.
BTIG added Toast to its list of the top fintech stocks to own in 2024. The stock has fallen nearly 10% since posting poorly received quarterly results five weeks ago, a sharp contrast to the general market's 6% ascent in that time.
Toast came under pressure after warning that transactions processed per location were declining on a year-over-year basis for the current quarter. BTIG argues that Toast should continue to grow in the coming year, even if gross payment volume per location continues to dip. With the number of eateries on the platform soaring 34% over the past year, Toast has a long runway of double-digit revenue growth, even if consumers pare back their restaurant spending.
Image source: Getty Images.
You're probably seeing more Toast readers coming your way at the end of a meal at popular indie restaurants. It's a win-win solution to get you settled up quickly and your table freed up for the next hungry patron.
However, this is also a juicy platform that solves a lot of a restaurateur's pressure points. A growing list of features allows Toast users to lean on the company to cover everything from payroll processing to managing an eatery's loyalty program.
There are now 99,000 restaurants relying on Toast to have the same tech tools as the major chains to improve efficiency. Business is booming, despite what should be a short-lived slump in consumer spending. Annualized recurring run rate at Toast is clocking in 40% higher than it was a year ago.
The stock is on sale. Toast shares have been more than halved since going public at $40 two years ago and are trading lower this year, while many growth stocks are climbing higher. Wood sees this as an opportunity.
Spotify
Wood doesn't just add to her positions when they're out of favor. It's been 14 months since I've written about Spotify. I argued that it could be your last chance to buy shares of the streaming music service under $100.
It did trade in the double digits for a couple more months, but Spotify has been consistently trading hands north of $100 since late January. It has more than doubled since my last look at the stock, topping $200 for the first time in nearly two years earlier this month.
Despite announcing layoffs earlier in December -- the third time that it has trimmed its payroll this year -- the audio platform's popularity continues to get louder. There are now 574 million monthly active users worldwide, a 26% increase over the past year.
It's disappointing to see premium subscribers growing more slowly than the less lucrative listeners on free ad-supported accounts, but that segment's 16% gain is still encouraging in this global economic environment. With Spotify's margins improving and profitability returning after five negative quarters, it's not a surprise to see the stock more than double in 2023.
Joby Aviation
Another big winner in 2023 is Joby Aviation. The early-stage provider of air-taxi services has seen its stock rise 94% this year.
Joby is assembling a fleet of small electric aircraft capable of vertical takeoffs and landings (or eVTOLs, for short). This is a pre-revenue company, but it has been lining up prominent investors and partners for its platform that will cater to people with the means to spend a lot of money to save travel time in heavily trafficked metropolitan areas.
Joby hit an important milestone last month when it successfully completed an exhibition flight in New York City. It claims that it's the first electric air taxi flight in the city by any operator and its first time flying in an urban setting.
It will take a couple of more years for Joby to generate meaningful revenue. It will take even longer than that to turn a profit. However, growth investors like Wood know that you have to arrive early sometimes if you want to eventually take off.
