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‘We are in a recession’: Long-time bull Cathie Wood is warning investors about the ‘big problem’ in today’s economy. Here’s 3 stocks she likes right now
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The official GDP estimate for Q2 won’t be available until later this month, but many experts – including Ark Invest’s Cathie Wood – are calling for a recession.
“We think we are in a recession,” Wood says in a recent CNBC interview. “We think a big problem out there is inventories — the increase of which I’ve never seen this large in my career. I’ve been around for 45 years.”
Based on how markets are doing, sentiment is certainly bearish. The S&P 500 is down 19% year to date. Wood’s flagship fund Ark Innovation ETF (ARKK) tumbled by more than 50% during the same period.
But investors are not giving up. CNBC noted Fact Set data showing that ARKK saw over $180 million in inflows in June.
“I think the inflows are happening because our clients have been diversifying away from broad-based benchmarks like the Nasdaq 100,” says Wood. “We are dedicated completely to disruptive innovation. Innovation solves problems.”
For those who share Wood’s vision, here’s a look at the top three holdings at ARKK.
Don’t miss
Zoom Video Communications (ZM)
When meetings and classes moved online due to the pandemic, Zoom’s business flourished.
But as the economy reopened and employees started going back to the office, there have been concerns about the growth potential of this video communications company.
Year to date, Zoom shares have fallen 35%.
But Wood continues to see opportunity in the stock. In fact, Zoom is currently the largest holding at ARKK, accounting for 10% of the fund’s weight.
Last month, Ark Invest released a research report showing how Zoom shares could see a glorious revival in the not-too-distant future.
“According to ARK’s open-source research and model, Zoom’s share price could approach $1,500, compounding at a 76% annual growth rate, in 2026,” Wood’s team wrote.
Since Zoom shares trade at around $119 a piece right now, that price target implies a potential upside of over 1,100%.
Tesla (TSLA)
Tesla has long been a staple for growth investors. But now, it’s also a name worth considering for contrarian investors – given how much the stock has pulled back.
Since reaching a closing high of $1,229.91 on Nov. 4, the stock has fallen by a staggering 41%.
But business remains on the right track. In Q1, deliveries of the Model S, Model X, Model 3, and Model Y totaled 310,048 vehicles, up 68% year over year.
Ark Invest also sees a gaming-changing product coming for the company: robotaxi.
“Tesla’s prospective robotaxi business line is a key driver, contributing 60% of expected value and more than half of expected EBITDA in 2026,” wrote Ark analyst Tasha Keeney in a report in April.
In that report, Ark expects a share price of $4,600 for Tesla by 2026. That represents a potential upside of over 530% from where the stock sits today.
So it shouldn’t come as a surprise that Tesla is the second-largest holding at ARKK with an 8.2% weight.
Roku (ROKU)
The secular trend of on-demand video streaming has created several winners in the tech space.
Roku is one of them. Since going public in September 2017, the stock has returned more than 200%.
The company’s platform gives users access to streaming services such as Youtube, Netflix and Disney+. Roku also offers its own ad-supported channels featuring licensed third-party content.
The company added 1.1 million active accounts in Q1, bringing its total active accounts to 61.3 million. Revenue rose 28% year over year to $734 million.
Although Roku’s business is growing, investors have been bailing in rapid fashion. The stock is down a staggering 78% over the past 12 months.
But Ark Invest is not giving up on Roku. In fact, Roku remains the third-largest holding at ARKK, accounting for 8.1% of the fund’s weight.
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BofA Securities maintains Amazon.com at ‘buy’ with a price target of $154.00
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Six people in critical condition, one still missing after Paris blast – prosecutor
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© Reuters. French firefighters and rescue forces work after several buildings on fire following a gas explosion in the fifth arrondissement of Paris, France, June 21, 2023. REUTERS/Gonzalo Fuentes
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PARIS (Reuters) – Six people remained in a critical condition and one person was believed still missing on Thursday, one day after a blast ripped through a street near Paris’ historic Latin Quarter, the city’s public prosecution office said. “These figures may still change,” prosecutor Maylis De Roeck told Reuters in a text message, adding that around 50 people had been injured in the blast, which set buildings ablaze and caused the front of one to collapse onto the street. Of two people initially believed missing, one has been found in hospital and is being taken care of, the prosecutor said, adding: “Searches are ongoing to find the second person.” Authorities have not yet said what caused the explosion, which witnesses said had followed a strong smell of gas at the site. The explosion led to scenes of chaos and destruction in the historic Rue Saint Jacques, which runs from the Notre-Dame de Paris Cathedral to the Sorbonne University, just as people were heading home from work. It also destroyed the facade of a building housing the Paris American Academy design school popular with foreign students. Florence Berthout, mayor of the Paris district where the blast occurred, said 12 students who should have been in the academy’s classrooms at the time had fortunately gone to visit an exhibition with their teacher.
“Otherwise the (death toll) could have been absolutely horrific,” Berthout told BFM TV. She said three children who had been passing by at the time were among the injured, although their lives were not in danger.
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4 big analyst cuts: Alcoa & DigitalOcean shares drop on downgrades
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© Reuters.
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Alcoa, DigitalOcean, Teleflex, and Xcel Energy.InvestingPro subscribers got this news in rapid fire. Never be left in the dust again.Alcoa stock drops on Morgan Stanley downgrade Alcoa (NYSE:) shares fell more than 3% pre-market today after Morgan Stanley downgraded the company to Underweight from Equalweight and cut its price target to $33.00 from $43.00, as reported in real time on InvestingPro.The firm sees a significant decline in consensus estimates, and as negative earnings revisions materialize, it believes the stock will face downward pressure and underperform.The analyst’s estimates for EBITDA in Q2, 2023, and 2024 are substantially lower than the consensus. The stock is currently trading above its historical average. The firm said its downward revisions in earnings estimates and price target are attributed to the company’s high operating leverage to aluminum prices.DigitalOcean stock plunges on downgradePiper Sandler downgraded DigitalOcean (NYSE:) to Underweight from Neutral with a price target of $35.00. As a result, shares plunged more than 5% pre-market today.The company reported its last month, with revenue beating the consensus estimate, while EPS coming in worse than expected. Furthermore, the company provided a strong outlook, which was above the Street estimates.2 more downgradesTeleflex (NYSE:) shares fell more than 3% yesterday after Needham downgraded the company to Hold from Buy, noting that UroLift expectations may still be too high.According to Needham, their checks indicate that urologists are reducing their use of UroLift due to its retreatment rates, reimbursement cuts, and increasing use of competing procedures. This is also supported by their Google Trends data analysis, which indicates decreasing search interest in UroLift.BMO Capital downgraded Xcel Energy (NASDAQ:) to Market Perform from Outperform and cut its price target to $64.00 from $69.00 to reflect the lower-than-expected terms of the company’s regulatory settlement in Colorado.Amid whipsaw markets and a slew of critical headlines, seize on the right timing to protect your profits: Always be the first to know with InvestingPro.Start your free 7-day trial now.
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