Volatility can rattle some growth investors, but Cathie Wood lives for the volatility. The co-founder, CEO, and chief investment officer of Ark Invest is making the most of the ups and downs of recent market activity to reshape her collection of aggressive growth exchange-traded funds (ETFs). She's also handily beating the market this year.
Ark was busier than usual in kicking off the new week of trading. Wood bought shares of Klarna (KLAR +0.01%), Qualcomm (QCOM +0.01%), and Intuitive Surgical (ISRG +0.01%) on Monday, adding to existing positions. Let's take a closer look at some of Wood's freshest buys.
NYSE: KLAR
Key Data Points
1. Klarna
Wood isn't afraid of new offerings, and she usually gets enough underwriter attention to get in on the initial public offering (IPO) itself. Klarna went public last month, and it's more than just another buy now, pay later (BNPL) player trying to make it in this cutthroat niche.
Klarna is a tech leader in this emerging space, providing short-term financing for big and even not-so-big purchases. At the heart of Klarna's platform is an evolving set of artificial intelligence (AI) tools that help it make stronger and more cost-effective connections between merchants and shoppers.
There is a void in banking, particularly with young consumers that aren't keen on dealing with traditional banks or high-interest credit card financing. The sweet spot for BNPL is offering shoppers interest-free installment loans with the merchant taking on the financing charges at a much lower rate than what a credit card user would have to pay.
London-based Klarna went public at $40 in early September. It opened at $45.50 -- trading as high as $47.48 a few days later -- but today it's trading just below $40. It's technically a broken IPO, and that's a dinner bell for Wood when she sees a long-term bullish thesis outweighing the short-term noise.
Klarna's business was starting to pick up ahed of its Wall Street debut. The 21% jump in revenue in the second quarter was its strongest quarterly growth in more than a year. The second half of this year should see continued acceleration, particularly with the IPO itself increasing brand awareness. In Wood's eyes, Klarna likely isn't a broken IPO at all. It's just an AI-fueled fintech play with "super app" ambitions waiting to break out.
NASDAQ: QCOM
Key Data Points
2. Qualcomm
Qualcomm is another stock that seems to be ignored by the market. The patent-rich designer and provider of chips and software found in mobile devices, wireless networks, laptops, and other gadgetry has seen its stock decline slightly over the past year, off a modest 2% but left far behind many of the market's rallying tech stocks.
It may be out of favor, but it's not out of growth prospects. After years of heady growth and a humbling step back in fiscal 2023, Qualcomm is seeing its business accelerate for the second fiscal year in a row. It has clocked in with double-digit revenue growth in each of the last five quarters.
Qualcomm is doing the right thing, diversifying away from its smartphone stronghold. Its automotive and Internet of Things segments combined to grow at a 23% clip in Qualcomm's latest quarter. It also continues to return money to its shareholders in the form of share buybacks and dividends. Wood isn't an income investor, but Qualcomm's 2.1% yield is more than just pocket change.
NASDAQ: ISRG
Key Data Points
3. Intuitive Surgical
Another stock with an unimpressive one-year chart is Intuitive Surgical. The shares are down 12% this year. It's been a challenging time for investors in the pioneer of robotic surgical arms that assist in procedures through more precise incisions and efficient patient recovery times.
The business is holding up just fine. Revenue is accelerating for the third consecutive year. Revenue rose 21% in its latest quarter, fueled by a 17% jump in procedures completed with its flagship da Vinci surgical system. The stock isn't textbook cheap. Despite its healthy growth and declining share price, Intuitive Surgical is trading for more than 60 times trailing earnings. It's still a historical bargain for Wood and fellow Intuitive Surgical investors.
