One of the most prominent growth investors of our time is Cathie Wood. Founder of the ARK Invest group of exchange-traded funds (ETFs), Wood has targeted high-growth companies tilted toward innovation as her focus. Accordingly, many growth investors are constantly digesting which Cathie Wood stocks may have the most potential to rally whenever the next bull market starts.
Indeed, aggressive growth investors aren’t done quite yet. We’ve seen a rather impressive rally off of June lows, driven by a search for value in beaten-up high growth stocks.
Now, whether this continues or not remains to be seen. But what’s for certain is how Cathie Wood is viewed among many growth investors. She’s one of the most aggressive growth-oriented bulls in a market that’s seemingly turned bearish. For those looking to add some risk to their portfolio, taking a look at Cathie Wood’s portfolio is often the first place to start.
Now, not every company Wood holds is of the highest quality. Many have been hit for good reasons. However, there are some picks I think are worth considering. Here are three of my top Cathie Wood stocks in this regard.
|Zoom Video Communications
Cathie Wood Stocks: Zoom Video Communications (ZM)
Among Cathie Wood’s largest portfolio positions is Zoom Video Communications (NASDAQ:ZM). The stock currently has a portfolio weighting of 10.4% in Wood’s ARK Innovation ETF (NYSEARCA:ARKK). Accordingly, next to Tesla (NASDAQ:TSLA), Zoom has clearly been a high-conviction pick for the growth fund manager.
Much of this bullish view appears to be tied to Zoom’s underlying technology. This is a company that’s taken a modern approach to innovation and technological architecture. Its previously launched Zoom IQ for Sales products, and Zoom Contact Center saw some excellent initial uptake. Additionally, Zoom Phone reported milestone results, hitting a record number of licenses sold this past quarter, with an increase of more than 100% in this division on a year-over-year (YOY) basis alone.
As a leading video conferencing technology provider, Zoom has certainly seen incredible growth in recent years. Much of this has been due to necessity, with many workplaces becoming fully remote. However, with a mass return to the office, many doubt this company’s ability to grow in the future. That’s a fair assessment, given Zoom’s reduced growth rates of late.
That said, for those thinking long-term who believe hybrid or remote work is here to stay, Zoom is an excellent long-term bet. At this valuation, I think the stock is worth a look at the very least.
Another large weighting for Wood is streaming play Roku (NASDAQ:ROKU). A more speculative bet, Roku also surged as a pandemic darling. Everything streaming-related was “in,” with investors looking for the highest-leverage plays on growth at a time when at-home entertainment was king.
Now, with movie theaters fully open and pandemic restrictions largely gone, the entertainment landscape has shifted. Like Zoom, Roku’s valuation has taken a beating. Many, including myself, would agree that this was probably warranted. Indeed, Roku’s valuation at its pandemic highs was unsustainable – that much is clear.
However, at these lower levels, there’s a compelling argument to be made for Roku. The ability for users to easily switch from cable television to streaming without upgrading their in-home tech may become more enticing, should we be heading into a recession. Notably, this company isn’t only a domestic play. Roku operates in approximately 20 countries, albeit with a North American focus.
Could ROKU stock have more downside from here? Potentially. However, at some level, even the least-favored stocks start to look attractive. This is one I’m keeping on my radar for now.
Cathie Wood Stocks: UiPath (PATH)
Finally, we have UiPath (NASDAQ:PATH). I’ve been following this automation solutions provider stock for some time. Like the other names on this list, UiPath’s valuation surged to levels that clearly overshot the company’s potential during the last bull market rally.
That said, I like its overall business model. UiPath’s end-to-end platform that helps companies automate mundane tasks is worth considering. The company’s focus on artificial intelligence tools to manage, build and run operations across many departments of large organizations could take off over time.
The question many investors have is how long this transition will take. While the company has seen some impressive growth during recent boom years, it’s unclear how loose corporations will be with their capital spending plans. While UiPath offers much in terms of productivity, these solutions aren’t cheap. Accordingly, should we be headed into a recession, this is a company with some operational risk to consider.
That said, over the long term, I think there’s plenty of structural growth to be had in the automation space. UiPath is a leader in this regard. Accordingly, for those looking for a multi-year bet on innovation and growth, PATH stock is an intriguing option to consider.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.