Cathie Wood has developed a reputation for investing in up-and-coming tech disruptors, and she's been ahead of the curve with some of her finds. Her company, Ark Invest, markets exchange-traded funds (ETF), and they each feature an assortment of stocks that fit a certain trend in disruptive technology.
Followers track her trades to see what new insight she might offer. Her ETFs have predominantly underperformed the market over time, but she has a good eye for identifying stocks to watch, and investors can get great inspiration from her picks. Here's how the flagship Ark Innovation ETF, the Ark Fintech ETF, the Ark Autonomous Tech and Robotics ETF, and the Ark Next Generation Internet ETF performed over the past three years compared to the S&P 500.
ARKK Total Return Level data by YCharts
Recently, she increased her position in Amazon (AMZN +0.55%), Shopify (SHOP 1.37%), and Toast (TOST 14.74%). All of these have beaten the market over the past three years.
Let's see if they're still great investing ideas.
1. Amazon: Just getting started in artificial intelligence (AI)
Amazon is an exceptional company and has delivered exceptional gains for shareholders over its lifetime. Although its highest gains might be behind it, some of its best days may still be ahead. It has cemented its lead over any competition in the near term, and as the leader in two growth industries, it has a lot to gain in the future. It's investing in growing its lead, and CEO Andy Jassy keeps talking about the massive opportunities that are coming in generative AI. Amazon offers a slew of generative AI services for Amazon Web Services (AWS) customers, and it has the top position in cloud services. It's planning to invest more than $100 billion this year in making sure it has a competitive platform to offer competitive solutions to existing clients and also gain new ones. AWS sales increased 19% year over year in the quarter, and it was Amazon's fastest-growing segment.
NASDAQ: AMZN
Key Data Points
Cathie Wood bought Amazon shares for the Ark Fintech ETF last week when it fell after its fourth-quarter earnings report. The quarter itself was phenomenal, with double-digit increases in revenue and operating income, but the market was disappointed in Amazon's guidance. She recognized the opportunity and pounced. But Amazon stock is still down since the report, and you can still buy on the dip, too.
2. Shopify: Huge opportunities in e-commerce
Shopify, on the other hand, surged after its fourth-quarter report. Revenue accelerated, and it reported huge increases in operating income and net income.
The future looks bright. E-commerce is expected to continue increasing as a percentage of retail sales, and Shopify is responsible for a large portion of U.S. and global e-commerce sales. It's the largest e-commerce software platform in the U.S., with 30% of the market, and it's generating growth along several fronts. But it's only the fourth-largest platform globally, with close to 11% of the market, according to Statista. One of its main growth drivers is international, where revenue growth outpaced the total at 33% year over year in the fourth quarter. Some of its other major growth drivers include physical retail, which also increased 33% in the quarter, and the business-to-business segment, which increased 150%.
NASDAQ: SHOP
Key Data Points
Cathie Wood is a longtime Shopify fan, and she bought Shopify stock last week for the Ark Next Generation Internet ETF. With its incredible performance and robust opportunities, it could be an excellent long-term holding for growth investors.
3. Toast: A niche tech service platform
Toast is a cloud-based restaurant management platform that's growing quickly and recently became profitable. It's the future of the restaurant industry, and it has emerged as one of the leaders in this space, even up against well-known powerhouses like Block's Square seller's business.
It has nearly 127,000 locations as of the end of the third quarter, with 7,000 new locations added in the quarter alone. It benefits from a high referral rate, implying customer satisfaction and a flywheel effect where many locations in a given region join the platform at a high rate. It's expanding in multiple ways to grow its platform, from targeting international businesses to cross-selling customers to more expensive plans to recently launching a new product aimed at the supermarket industry.
NYSE: TOST
Key Data Points
Growth has resulted in long-awaited profits, and net income turned from a loss in the previous quarter to $56 million in the 2024 third quarter.
Cathie Wood added shares to the Next Generation Internet ETF last week, and investors can still get in on this fast-growing winner.
