The market rally in growth stocks is changing the way that Cathie Wood approaches her portfolio moves as the co-founder and CEO of Ark Invest. She has spent most of the past couple of years adding to existing stakes on dips. Now she isn't afraid to buy into the upswing.
Wood bought shares of Palantir Technologies (PLTR 3.73%), Toast (TOST 3.42%), and Roku (ROKU -10.29%) on Thursday, building up some of her largest positions. Roku has been sinking lately, but Palantir and Toast hit new recent highs on Thursday. Let's take a closer look at these three purchases.
1. Palantir
Shares of Palantir hit another two-year high on Thursday. The software developer for the intelligence community has seen its stock more than quadruple since the start of last year.
The primary catalyst for this week's rally was the announcement that it had been awarded a $178.4 million contract to develop and deliver a new ground targeting system for the U.S. Army. Palantir has been making software for the military and other government contractors for years, so it's not a surprise to see it score another big deal on that front. However, it's also been getting significant wins in the private sector lately.
Image source: Getty Images.
Not every Wall Street pro was sold on the stock's rally this week. Mizuho analyst Gregg Moskowitz bumped his price target up from $18 to $21, but he has a neutral rating on the shares. Palantir stock is trading well above his new price goal. Earlier in the week, it was RBC sticking to its Street-low price target of $5, arguing that the new Army TITAN deal was likely already baked into Palantir's outlook.
Palantir is one of a handful of stocks that have taken off since being hailed as a play on artificial intelligence (AI). It's not just hype. Palantir did post better-than-expected financial results last month, with an adjusted profit of $0.08 per share on a 20% increase in revenue. Palantir has had its ups and downs, but the stock has now more than doubled from its 2020 IPO price of $10.
2. Toast
Shares of Toast hit a seven-month high on Thursday. If you dine at restaurants or pick up takeout, there's a good chance you're familiar with Toast. It's the leading cloud-based point-of-sale platform provider for eateries. There are now 106,000 locations taking orders and settling up transactions with its Toast-branded devices.
The company impressed investors three weeks ago with a 35% increase in revenue for its latest quarter. A 32% rise in gross payment volume didn't keep up with the 34% gain over the past year in locations, but Toast warned in its previous quarter that transaction volume per restaurant was trending lower for the holiday quarter.
The stock is up 36% so far in 2024, well ahead of the general market's 8% ascent. It's not Palantir with its 54% jump year to date, but Toast is certain delivering for shareholders lately.
3. Roku
Palantir and Toast are market winners so far this year. Roku is not, posting a 31% decline in price in 2024. A poorly received quarterly report last month and the threat of a new competitor have smashed the stock that had more than doubled in 2023.
Roku is more in the mold of the old-school Wood addition than Palantir or Toast. It's a top holding -- currently her fifth-largest position across all of Ark Invest's portfolios -- and moving lower. She's hoping that Roku's dominance in a growing niche, with 80 million active accounts, is enough to make the bargain pay off over time.
Roku's mid-February financial update featured healthy double-digit revenue growth. There was also an encouraging double-digit percentage improvement in cutting operating costs and bottom-line losses. However, a surprising sequential dip in average revenue per user rattled those who were bullish on the streaming services stock. They'll be watching Roku's next quarterly update closely, and when you're Roku, you don't mind attracting viewers.
