Cathie Wood is going to buy at a good price: 3 stocks she just bought

ARK Invest CEO Cathie Wood has garnered a lot of attention recently as her company’s publicly traded funds (ETFs) have yielded impressive returns.

And investors looking for some of Wood’s best options to add to their own portfolios would be smart to take a closer look at some tech companies he snatched up when stock prices fell recently. This includes Unity software (NYSE: U), JD.com (NASDAQ: JD), i Roblox (NYSE: RBLX). That’s why three Motley Fool contributors think investors should consider buying these shares now.

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Playing video games, 3D creation, virtual reality and more

Danny Vena (Unity Software): Unity stock that Cathie Wood has been buying hands on in recent weeks is Unity Software. Wood has added to already substantial positions in four of ARK’s six flagship ETFs, making Unity the top position of three of them. All in all, the four funds own more than 10.6 million shares of the stock, worth more than $ 1.2 billion.

It’s easy to see why Wood is so enthusiastic about Unity Software. The company provides the world’s leading platform for creating and operating interactive 3D content in real time. It offers a complete set of tools and programs that help developers create 2D and 3D content for mobile phones, tablets, PCs and consoles, as well as augmented reality and virtual reality devices.

The unit has an unmatched scale and reach. In fact, 53% of the top 1,000 mobile games appleApp Store i AlphabetThe Google Play Store, as well as more than 50% of mobile games, PC games, and console games combined, are made using the Unity platform. The company has 1.5 million monthly active creators in 190 countries, accounting for more than 3 billion app downloads per month.

What attracts developers to Unity is the ability to view and modify their creations in real time. This translates into a significant decrease in design and development time, which makes developers more productive. It also helps them react and adapt their games and apps to end-user feedback, back in real time. Games built into the Unity platform can be created instantly and deployed to more than 20 popular platforms, including Microsoft Windows and Xbox, Sony PlayStation, Mac, iOS and Android, among others.

Unity’s full-year revenue for 2020 increased 43% year-over-year, to $ 772 million. This strong growth continued during the first quarter, with revenues of $ 235 million, up 41%. Like many high-growth startups, Unity is full of red ink, but the news isn’t bad at all. Adjusting for single charges related to IPO, its 2020 operating loss improved by 45%.

Wood has other reasons to invest heavily in Unity Software. A ARK Invest’s Great ideas for 2021 noted that revenues from virtual worlds (which include video games, augmented reality and virtual reality) are expected to grow by 17% annually over the next few years, from the current 180 billion to 390 billion in 2025. With its unique position in a broad and growing ecosystem, Unity could be one of the biggest beneficiaries of this accelerated trend.

Finally, Unit Software shares are currently available at an underground price and are sold at a 31% discount on their recent highs.

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Maybe it’s time to get into this e-commerce leader

Brian Withers (JD): JD.com seems to be one of Cathie Wood’s favorites. Not in vain, it is the second largest participation of the ARK Autonomous technology and robotics ETF, as the leading Chinese retailer relies on robotic technology for storage and even last-mile delivery functions. But this first technology company is also involved in three other ARK ETFs. Let’s see why Wood has added more stocks in recent weeks.

First, stocks have fallen more than 30% from their high, not because the business is bad. In fact, the company just presented stellar first-quarter results. Second, ARK funds have owned JD shares since mid-2017, and in the first quarter, the funds more than doubled the share count during the quarter. It is likely that these purchases during this year and recent purchases show that they are excited about the company’s performance, long-term prospects and valuation.

Let’s look at his most recent quarter. Not in vain, the top line declined sequentially from the holiday quarter, but managed to exceed analysts’ expectations and record a year-on-year increase of 39%. Revenues from the company’s operations remain in the black, but continue to have reduced margins as it invests profits in growth efforts. Lastly and probably the most exciting thing for investors is that the platform continues to attract customers at a fast pace, even with hundreds of millions already there.

Metrics

Q1 FY2020

Q4 FY2020

Q1 FY2021

QOQ change (decline)

YES Change

Income

$ 20.6 billion

$ 34.4 billion

$ 31 billion

(10%)

39%

Revenue from operations

$ 328 million

$ 91 million

$ 253 million

178%

(23%)

Active customer accounts

387 million

472 million

500 million

6%

29%

Data source: launch of company profits. QOQ = quarter to quarter. YOY = year after year.

Looking to the future, the company delves into rural China. Over the past twelve months, more than 80% of its 112 million new active customers have come from lower-tier markets. And the company is expanding its footprint to better serve these regions. With its more than 1,000 warehouses across the region, its logistics team can now reach almost the entire country with fast delivery services. Finally, the newly created business group, Jingxi, is set up to serve price-sensitive customers in lower-tier regions. In its first quarter of operation, Jingxi served 17 provinces with its e-commerce operations.

There is much to like about this leading Chinese e-commerce retail business, especially with its stock trading at reasonable valuations. Compared with Sea Limiteda high price – sales ratio of 25 i MercadoLibre16, JD shares are valued at 1 P / S. In addition, it has a fresh P / E ratio of 15, while its Latin American and Southeast Asian counterparts have no profit to record a P ratio. / E.

No wonder Cathie Wood and the ARK investment team are adding to their position with the shares at a discount to their recent high. Maybe it’s time you do the same?

A child holding a tablet sitting on the couch.

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This video game material is not a child’s play

Chris Neiger (Roblox): Roblox is a popular video game platform that not only allows users to play, but also create their own games, and so far has been a massive success.

Cathie Wood has also taken note of the company and bought more shares of Roblox last week. Shares have fallen about 4% over the past 30 days, which could have spurred Wood’s funds to add to its Roblox position.

And investors may be right to follow in Wood’s footsteps. Roblox has created a video game platform unlike anything its competitors have, adding new players and increasing the platform’s commitment to a healthy clip.

Roblox has more than 43 million daily active users, 8 million developers who create games on its platform, and 100 million active users worldwide.

In the most recent quarter, sales increased by 140% over the previous quarter and its users spent 9.8 billion hours contracted with the platform, an increase of 98% year-on-year.

Investors should know that this company is unprofitable (it reported a loss of $ 134 million in the last quarter) and that it returned to trading in March. These two factors make the stock price volatile in the short term as the company continues to grow.

But the long-term potential of this company remains intact. Roblox is taking advantage of the fast-growing video game market, which is estimated to grow from $ 157 billion last year to $ 293 billion in 2027.

And with the company’s impressive user base, its growing number of developers, and its unique position of allowing its own users to create games for the platform, investors may want to follow Wood’s leadership in this and pick up some stocks for your own portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We are motley! Questioning an investment thesis (even one’s own) helps us reflect critically on investment and make decisions that help us be smarter, happier, and richer.



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