As you get older, you should start to reduce your exposure to risky assets and focus more on preserving your capital and building up passive income streams. That's why I rarely turn to Cathie Wood's Ark Invest portfolios, which are full of innovative but highly volatile companies, for stock ideas at this point in my life.
However, I do appreciate Cathie Wood's research and deep insights into next-generation technologies. She has a keen eye for spotting disruptive trends and companies capable of benefiting from them.
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As such, I do use her stock holdings as a source of inspiration for my kids' portfolios, which have a much longer investment horizon than mine. I want to allow them to benefit from the potentially parabolic growth of these highly innovative companies over the next several decades, possibly resulting in a multi-million dollar bankroll.
Here are two Cathie Wood growth stocks I plan on buying for my kids over the next two years and then letting them compound over time.
An attractive buy-and-hold vehicle
CRISPR Therapeutics (CRSP 0.34%) is a leader in gene-based medicine. The company made history recently by landing the first Food and Drug Administration (FDA) approval for a CRISPR/Cas9 gene-edited medicine with Casgevy.
Casgevy is FDA-approved for both severe sickle cell disease and transfusion-dependent beta-thalassemia in patients 12 years and older. Although Wall Street analysts think the therapy could have a slow ramp-up because of logistical issues, the therapy is forecast to eclipse $2.2 billion in sales at peak sometime around 2030.
Why is CRISPR stock a great long-term buy? Casgevy's approval is a major milestone, but it's not the only reason to buy this gene-editing pioneer.
CRISPR Therapeutics has a strong pipeline of innovative therapies, with several targeting diseases that could also bring in blockbuster revenues. That's a tremendous value proposition for a company with a market cap of approximately $5 billion at the time of this writing.
To capture the bulk of the biotech's lofty upside potential, though, you're probably going to have to be willing to hold its stock over a multidecade timeframe. Those that do, however, could be looking at a ten- to twentyfold return on capital.
A gaming platform worth owning for the long haul
Roblox (RBLX 1.35%), the company that offers a 3D digital world where users can create and play games, is one of my daughters' favorite platforms. They love to collect and spend Robux, the company's virtual currency, which they often ask for as gifts. However, as an investor, I also appreciate the value proposition and growth potential of Roblox's business model.
In the last quarter, Roblox reported a remarkable 20% increase in average daily active users, a 20% rise in hours engaged, and a 38% surge in revenue year over year. These are impressive metrics that demonstrate that Roblox is not a passing fad, but a sustainable and innovative platform.
That being said, I do expect this gaming stock to be a fairly volatile growth vehicle. Roblox will have to continue to innovate to stay ahead of its competitors, and sometimes gaming platforms lose their appeal for extended periods for reasons beyond a company's control.
But I suspect Roblox will ultimately follow a similar trajectory as Nintendo. Despite its rocky history, Nintendo's stock has delivered a whopping 818% total return on capital for shareholders over the past 20 years. That's the power of a beloved gaming platform, especially one that grows with its user base.
