Superstar investor Cathie Wood is known for betting on innovators no matter what the market is doing. She reinforced her bets on certain declining stocks even as they struggled in the bear market because she focuses on the long term. At the same time, Wood also will pick up rising stocks if they still are fairly valued considering future prospects -- a stock that's climbed still may represent a bargain.
Wood's tenacity paid off last year, when her flagship Ark Innovation fund advanced 67%, outperforming the S&P 500. In the new bull market, this top investor, with her focus on growth stocks, also might continue to win. What is she buying these days? In her latest search for bargains this past week, she added to some of her favorite positions.
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1. CRISPR Therapeutics
Wood is a big fan of the promise of gene editing, and CRISPR Therapeutics (CRSP 0.34%) is leading the way in this potentially game-changing field. The company recently scored the world's first authorization of a CRISPR-based gene editing therapy when the U.K. gave Casgevy the nod. U.S. regulators also recently approved Casgevy for blood disorders sickle cell disease and beta thalassemia.
What makes gene editing so exciting is that by fixing faulty genes responsible for disease, it results in functional cures. For example, those who go for Casgevy receive a one-time treatment and then should go on to live their lives, symptom-free.
Casgevy has blockbuster potential, but CRISPR Therapeutics shares profit with partner Vertex Pharmaceuticals. Still, any revenue from this first commercialized product is great news and should help CRISPR Therapeutics advance its pipeline. And the biotech has a solid financial situation, with more than $1.9 billion in cash. Finally, a regulatory nod for a CRISPR-based product is good news as it serves as a vote of confidence in the technology -- a technology the biotech uses across its pipeline.
CRISPR Therapeutics shares have climbed, but they're trading at much lower levels than they were a few years ago when we had a lot less visibility on whether the company would be able to bring a product to market.
2. Meta Platforms
Meta Platforms (META 0.43%) is a social media giant, with Facebook, Messenger, Instagram, WhatsApp, and Threads rounding out its family of apps. Together, they attracted 3.96 billion monthly active users in the third quarter, an increase of 7% year over year.
Considering the dominance of these social media apps, it's hard to imagine a rival easily unseating Meta. And this is great news because Meta generates most of its revenue through selling advertising to people and businesses aiming to reach the users of these platforms. In the quarter, revenue climbed in the double digits to more than $34 billion.
This market strength is something that probably caught Wood's eye, but she also likely appreciates Meta's commitment to investing in a top area of innovation: artificial intelligence (AI). In the latest earnings call, Chief Executive Officer Mark Zuckerberg said the company's biggest investment area this year will be AI, in engineering and compute resources.
Meta's Reality Labs business, meant to develop metaverse and AI projects, remains a small part of the company's revenue picture, but it could position Meta for a win down the road if these technologies take off.
In spite of recent gains, Meta shares still trade for only 22 times forward earnings estimates, a bargain for this market leader and innovator.
3. Ginkgo Bioworks
Ginkgo Bioworks (DNA 10.60%), as a potential game-changer in the biopharma industry, is one of the top positions -- No. 11 out of 43 holdings -- in Cathie Wood's healthcare fund. The company engineers cells to help power projects in many areas, from agriculture to pharmaceuticals. But it's in the biotech and pharma industry that this company could potentially transform the way things are done, speeding up the discovery of drugs. Ginkgo's foundries design and test organisms at scale, so that companies can more quickly identify promising candidates.
The time and cost of drug discovery is one of the biggest challenges faced by the industry, so it's no surprise pharma clients are starting to flock to Ginkgo. The company last year signed deals with big pharma players including Pfizer and Merck. Pfizer will use Ginkgo's platform to help in the discovery of RNA molecules, and Merck will use the technology to improve its manufacturing of biologics.
Ginkgo's pharma and biotech programs doubled over the past two years, today representing 36% of the company's total active programs. The industry now is Ginkgo's biggest customer, with the greatest percentage of total active programs among five industries. And Ginkgo's pharma and biotech revenue climbed more than 50% last year. So, this represents a key area of growth for Ginkgo.
The company has invested more than $1 billion in its technology, from automation to data assets and AI models, with the aim of helping biopharma companies benefit from economies of scale. If Ginkgo makes this happen, the stock, trading for less than $2 today, could skyrocket.
