The stock market can be quite a difficult place to navigate these days. Indeed, U.S. stocks are not at all cheap at the moment. The ratio of stock market capitalization to GDP (Gross Domestic Product) shows that stocks in the U.S. are the most overvalued in history. That includes the dot-com bubble, by the way.
But hyper-growth investors such as Cathie Wood are undeterred. In fact, Ms. Wood has been amping up her exposure to various stocks others are avoiding right now.
Given the fact that Ms. Wood has had an incredible track record during this recent bull market, perhaps folks should follow her into these plays. After all, historical performance is important. And her track record of picking growth stocks is rather strong, to say the least.
These seven stocks are among Ms. Wood’s top holdings across her various ETFs. Those intrigued by what Cathie Wood is up to may want to take a deep dive into some of these names. After all, where there’s smoke, there’s usually fire. And Cathie Wood has been on fire of late.
Here are 7 Cathie Wood stocks every growth investor needs in their portfolio:
- Roku (NASDAQ:ROKU)
- Tesla (NASDAQ:TSLA)
- Square (NYSE:SQ)
- Shopify (NYSE:SHOP)
- CRISPR Therapeutics (NASDAQ:CRSP)
- DraftKings (NASDAQ:DKNG)
- Virgin Galactic (NYSE:SPCE)
Bears tend to focus on valuations, and say the growth rates companies are seeing are unsustainable. Who’s right and who’s wrong will be determined over time. But for now, investors looking for growth are looking closely at what Ms. Wood is buying or selling. The good news is, she makes her trades public, so everyone can see what she owns at a given time.
Top Cathie Wood Stocks: Roku (ROKU)
One of the stocks that has benefited quite nicely from the pandemic is Roku. This streaming player has posted rather incredible earnings, and a growth rate that has made even the most bullish growth investors (such as Cathie Wood) salivate.
That said, ROKU stock isn’t without controversy. The company has been embroiled in a fight with Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) over licensing rates since April 30. The brawl erupted after Google removed YouTube TV from Roku’s channel store. This has significantly reduced investors’ confidence in the stock lately.
Accordingly, it’s perhaps unsurprising to see ROKU stock has been down for the last 3 months. Combined with concerns around high valuation, the conflict naturally led to this point of view.
That said, there’s certainly reason to be bullish on Roku from a long-term perspective. This is a high-growth company that is only scratching the surface of its potential in the streaming world. Many investors think of Roku as an early Netflix (NASDAQ:NFLX) in this regard.
Whether this stock sees Netflix-like returns over the next decade or two remains to be seen. After all, there’s a lot of revenue growth that needs to happen between now and then. However, this is certainly a stock Cathie Wood fans should continue to watch.
Tesla (TSLA)
The largest EV manufacturer of the world, Tesla is a core holding for many of Cathie Wood’s portfolios. In fact, this stock has been a core holding of hers for many years, driving her funds’ outperformance relative to her peers.
What a great pick to have as a core holding.
Given the sentiment surrounding Tesla, it’s easy to understand why Ms. Wood has been an absolute superstar in the growth investor world. She has stuck with Tesla through various scandals over the years. And her (mostly) unbridled enthusiasm for Tesla is contagious.
Tesla fanboys everywhere love Ms. Wood. Those who don’t own TSLA stock directly may choose to own one of Cathie Wood’s ETFs, providing diversified exposure to other growth stocks. However, the fact that Tesla is so core to Wood’s growth strategy makes this a stock every Cathie Wood fan needs to consider.
Tesla’s growth prospects don’t need to be highlighted. Those bullish on Tesla may want to consider Cathie Wood’s portfolio as a different path to gaining exposure to an entire basket of Tesla-like companies.
Square (SQ)
Another top holding for Ms. Wood is Square. This payments processor and facilitator of ecommerce transactions has boomed in investor interest through the pandemic. Indeed, this is one of the few companies to see revenue skyrocket at a time of relative mayhem in the economy.
This stock has been better than a 5-bagger since the depths of the pandemic. Accordingly, Square has been one of Ms. Wood’s best-performing holdings of late. This is also a stock that has grown to one of her largest positions overall, due to this capital appreciation trajectory of late.
Whether Square can keep up its torrid pace of revenue growth is up for debate. As the economy reopens, perhaps some of the momentum this stock has seen will be lost. However, there’s an argument to be made that more economic activity (particularly from retailers) is a very good thing.
Square has also been eyeing international expansion of late. The company is focusing on key markets such as Canada to boost growth. As Square ventures off into the world to grow its brand, investors may want to come along for the ride. Ms. Wood seems to be very bullish on this name, making SQ stock a top growth stock to watch right now.
Shopify (SHOP)
Shopify is a relatively new addition to Ms. Wood’s portfolio. However, Cathie Wood has been buying this stock in bulk of late. Currently, Shopify’s moving up the ladder in terms of Wood’s top holdings list, and many speculate this company could be Tesla-like in size over time.
Why?
Well, Shopify happens to be one of the largest ecommerce platform providers in the world. The company’s ecommerce ecosystem has powered the transition for thousands of businesses to either a purely online model, or an omnichannel one. In this era of ecommerce growth, Shopify is as close to a pure play on this sector as one can get.
A hyper-growth stock, Shopify’s valuation has always been sky-high. However, the company’s recent earnings have shown Shopify’s ability to grow into its valuation. Indeed, the various breathers this stock took this year have allowed investors to get in at what appears now to be very attractive entry points. Cathie Wood has been a key buyer of Shopify on these dips.
Will she be proven right over time? Well, Shopify’s track record speaks for itself. As long as this company continues to blow away earnings expectations each and every quarter, it appears the sky is the limit. At least, Cathie Wood fans hope so.
CRISPR Therapeutics (CRSP)
A company that has grown in size, particularly in Cathie Wood’s genomics fund, is CRSP stock. CRISPR Therapeutics is a company that, you guessed it, utilizes CRISPR technology. A breakthrough technology aimed at slicing and dicing our DNA to edit genomes and potentially remove diseases, cancer, or genetic defects from our DNA, CRSP stock has been an enticing one to watch for science nuts as well as hyper-growth investors.
To date, some impressive studies have shown effectiveness with companies utilizing CRISPR technology. Accordingly, this is one of a group of genomics stocks that has taken off.
Another point for Cathie Wood, who has already set up a fund aimed at genomics.
Indeed, as one of Wood’s core holdings, CRSP stock has been on an absolute tear in recent years. A highly-volatile stock, like all her holdings, CRSP stock still shows tremendous potential to be a multi-bagger from here.
Of course, risks exist, as they do in this entire sector. Investors will want to see meaningful results and a path to profitability at some point. But for now CRSP stock remains a hot commodity in this new world of genomics and Cathie Wood has been on the money with this pick.
DraftKings (DKNG)
Innovation in any sector, regardless of business segment, is what Cathie Wood is after. It turns out gambling isn’t a sin industry that’s out of the question for Cathie Wood, known to be religious in her own right.
That’s intriguing on a personal level. However, from a business standpoint, there’s a lot to like about DraftKings.
This is a company that’s set on revolutionizing gambling in the U.S. With laws around online gambling relaxing (in part due to the pandemic — thanks, I guess?), DraftKings has been able to enter new markets (states) in recent quarters. This has boosted the company’s growth outlook and provided investors with a real tangible growth trajectory to bank on moving forward.
Sports gambling has absolutely taken off this year, again perhaps due to the pandemic. With more in-person entertainment options available, sports fans appear to be wanting even more excitement when watching their favorite game. DraftKings’s platform has become a leading option for said consumers in the U.S., and is growing its presence globally as well.
Revenues this past quarter surged nearly 300% year-over-year, highlighting this fact. Indeed, this is a Cathie Wood stock she appears to be right on the money with.
Virgin Galactic (SPCE)
Last but not least, an aspirational pick.
Most of us have wanted to be astronauts, or at least visit space, at some point in our childhoods. The fact that a company (really, a group of companies) has come out and made this dream a possibility for us, is incredible.
Indeed, Virgin Galactic is an intriguing growth stock to consider. A company requiring a longer investment time horizon to realize profitability, this is a higher-leverage play on an already hyper-growth industry. Seems to fit Cathie Wood’s profile well.
Virgin Galactic’s stock price has been on a space mission of its own. Prior to the company’s inaugural launch, SPCE stock mooned (literally and figuratively) to more than $60 per share. Given the fact that this is a de-SPAC (special purpose acquisition company) stock, that’s impressive gains in a relatively short amount of time.
Currently, SPCE stock is trading around the $25 level, due in part to a massive equity issuance on the heels of this stock price increase. That said, this is an intriguing level for hyper-growth investors like Cathie Wood to snag shares. I’d keep an eye on this stock to see how Ms. Wood’s funds gobble up shares (or don’t) from here. Those looking to follow Ms. Wood into trades may want to watch this one closer than the others on the list.
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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.