14 Best ARK Stocks To Buy Now
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In this article, we discuss the 14 best ARK stocks to buy now. If you want to skip the detailed analysis of ARK Investment Management and its hedge fund performance, skip directly to the 5 Best ARK Stocks To Buy Now.
ARK Investment Management is one of the most renowned investment management firms in the U.S. The fund is owned and run by American investor Catherine Duddy Wood, better known as Cathie Wood. The firm was previously headquartered in New York but moved to Florida in 2021.
ARK Investment Management's main area of focus is disruptive technology. The firm's flagship ARK Innovation ETF (NYSE:ARKK) had an annual average return of 39% between 2014 and 2021. However, the fund has been falling consistently since its February 2021 highs.
As of December 15, ARK Investment Management’s flagship ETF has declined by over 66% year to date. However, the ETF has seen $1 billion worth of inflows year to date. In an interview with Bloomberg, Cathie Wood defended her fund saying that the inflows are due to the investors’ trust in the strong research done by her team and that things will be different in five years. She added that especially young people realize that her firm is investing in the future, rather than the past. She further said that the future is extremely bright for the firm.
In the third quarter of 2022, ARK Investment Management’s 13F portfolio was valued at $14.347 billion, down from $16.91 billion in the previous quarter. The fund made 12 new stock purchases in the quarter and sold out 112 stocks. Some of the best ARK stocks include Tesla, Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Roku, Inc. (NASDAQ:ROKU).
Cathie Wood of ARK Investment Management
Our Methodology
After going through ARK Investment Management’s 13F portfolio in the third quarter of 2022, we chose the 14 stocks with the highest concentration in the firm's portfolio.
Best ARK Stocks To Buy Now
14. Unity Software Inc. (NYSE:U)
Value of ARK Investment Management’s 13F Position: $358.844 million
Number of Hedge Fund Holders: 34
Unity Software Inc. (NYSE:U) is a software development company and it is mainly known for its game engine, Unity. Unity is used to develop video games and a few other applications.
In the last three months, 13 analysts have covered Unity Software Inc. (NYSE:U) with 8 Buy ratings and 5 Hold ratings. Their average price target of $39.29 still provides a significant upside from the stock price of $33.63 at the market closing time on December 14.
ARK Investment Management was the most prominent stakeholder of Unity Software Inc. (NYSE:U) in the third quarter of 2022. The firm owned over 11.26 million company shares worth $358.844 million, representing 2.5% of the fund’s portfolio. In Q3, 34 hedge funds held Unity Software Inc. (NYSE:U)’s shares.
Tesla, Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Roku, Inc. (NASDAQ:ROKU) are some of the best ARK stocks along with Unity Software Inc. (NYSE:U).
Here is what ClearBridge Investments had to say about Unity Software Inc. (NYSE:U) in its Q1 2022 investor letter:
“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still underpenetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.”
13. Shopify Inc. (NYSE:SHOP)
Value of ARK Investment Management’s 13F Position: $391.506 million
Number of Hedge Fund Holders: 34
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company that operates in around 175 countries. ARK Investment Management increased its holdings in the company by 1098% in the third quarter to 14.5 million shares, valued at $391.506 million. The company covered 2.72% of the firm’s portfolio.
Shopify Inc. (NYSE:SHOP) announced record sales for Black Friday and Cyber Monday week at the end of November. The sales were up 19% to $7.5 billion, compared to the same period in 2021. The peak sales volume was $3.5 million in sales per minute on November 25. London, Los Angeles, and New York-based customers were responsible for most of the sales during the week.
On December 8, SMBC Nikko analyst Andrew Bauch maintained an Outperform rating on Shopify Inc. (NYSE:SHOP)’s shares and raised his price target to $45 from $40. He believes that out of the companies that fall on his coverage list, Shopify Inc. (NYSE:SHOP) is one of the companies that might accelerate sales growth and increase its margins in 2023.
Artisan Partners made the following comment about Shopify Inc. (NYSE:SHOP) in its Q3 2022 investor letter:
“Shopify Inc. (NYSE:SHOP) is a leading e-commerce platform supporting over 2 million merchants with software, online storefronts and payments technology. Like Uber, Shopify returned to mid-cap territory during Q2 as the company’s profit cycle and share price have faced significant pressure. Earlier this year, the company began a phase of investments to support a range of future growth drivers, including Shopify Plus for larger brands, logistics services, international expansion, point-of-sale payments and social media-based commerce. With high inflation putting pressure on consumer spending, and with e-commerce activity normalizing after a massive pandemic spike, Shopify’s earnings have fallen sharply. While we have outstanding questions about the likelihood of success for the company’s capital-intensive logistics investments, we decided to take advantage of the stock’s >75% YTD decline and initiate a GardenSM position at a deep discount to our PMV estimate. Our thesis is predicated on our belief there is still a long runway for commerce to move online, and Shopify is well-positioned to win share of this market. The company has created an ecosystem of products (payment processing, financing, shipping, customer engagement tools, etc.), partners (TikTok, Google, Meta), sales channels and over 6,000 apps to help its merchants sell online and establish direct relationships with customers.”
12. Beam Therapeutics Inc. (NASDAQ:BEAM)
Value of ARK Investment Management’s 13F Position: $404.508 million
Number of Hedge Fund Holders: 27
Beam Therapeutics Inc. (NASDAQ:BEAM) is an American biotechnology company headquartered in Massachusetts. It takes the 12th position in our list of best ARK stocks. Since the beginning of the year, the company is working on a four-year collaboration with Pfizer Inc. (NYSE:PFE) focusing on in vivo base editing programs for rare genetic diseases of the liver, muscles, and central nervous system.
Out of 920 hedge funds tracked by Insider Monkey, 27 were bullish on Beam Therapeutics Inc. (NASDAQ:BEAM) in the third quarter, up from 17 in the previous quarter. ARK Investment Management held 8.49 million company shares in the quarter at a combined value of $404.508 million, making it the hedge fund with the largest stake in Beam Therapeutics Inc. (NASDAQ:BEAM).
In Q3, Beam Therapeutics Inc. (NASDAQ:BEAM) reported a GAAP net loss of $1.56 per share, missing the consensus by $0.26. However, the company’s revenue increased by a massive 1977.6% year-over-year to $15.79 million, outperforming the estimates by $8.64 million. The company exited the quarter with $1.1 billion of cash, cash equivalents, and marketable securities.
11. Twilio Inc. (NYSE:TWLO)
Value of ARK Investment Management’s 13F Position: $471.993 million
Number of Hedge Fund Holders: 58
Twilio Inc. (NYSE:TWLO) is a communications company based in California. The company offers communication tools such as voice messages, phone calls, and SMS, and also operates call centers.
Twilio Inc. (NYSE:TWLO) stock is trading at $48.05, which is near its 52-week low of $41.00. However, Twilio Inc. (NYSE:TWLO) still has a strong balance sheet with $4.21 billion in cash and short-term investments, and the long-term debt of the company is just below $1 billion. This pull-back might provide an attractive entry point for long-term investors.
ARK Investment Management maintained its position as the most prominent shareholder of Twilio Inc. (NYSE:TWLO) for the sixth consecutive quarter at the end of Q3 2022. The firm owned 6.8 million company shares, worth $471.993 million, covering 3.28% of the firm’s portfolio.
Here is what RiverPark Funds specifically said about Twilio Inc. (NYSE:TWLO) in its Q2 2022 investor letter:
“Twilio Inc. (NYSE:TWLO) offers a full suite of cloud-based communications software, services and tools that allows companies in a wide range of businesses to build omni-channel communications capabilities (video, chat, voice, SMS, fax and email) directly into their customer facing applications without needing to build back-end infrastructure and interfaces. The company also provides software tools that allow its users to gather and categorize customer data (its Segments offering) and to create next generation call centers (Flex) to utilize this data in customer interactions. Twilio is the leader in this fast growing $80 billion Communications-Platform-as-a-Service (or CPaaS) market, having grown its customer base 5x in the past five years to 268,000 customers and to a $3.5 billion run rate revenue for 1Q22. The company’s net revenue retention rate has exceeded 125% every year since its 2016 IPO and its customer churn remains less than 4% (for customers with > $30,000 revenue), evidence of the loyalty of Twilio’s customers to its platform (and a high switching cost) as well as the company’s increasing number of offerings. The company’s revenue is generated from both recurring revenue from subscription fees as well as volume-based charges for usage.
TWLO expects to maintain a +30% annual organic revenue growth rate through at least 2024, with long-term gross margin expansion from 56% to 60%-65%, and EBITDA margins approaching 35% as revenue scales. As of 1Q22, TWLO had $4.2 billion net cash, and should turn FCF positive this year. Over the next several years, we expect the company to grow its excess cash significantly as the company operates an asset light business model with low capital needs of just over 1% of current revenue.
We forecast 30% annual revenue growth through 2027, with EBITDA margins approaching the company’s long-term model guidance of 27% to generate $11.49 of EPS. At its current stock price, TWLO trades at about 5x this 2027 EPS projection (and trades at only 3x our 2030 EPS estimate). We project that the company will generate nearly 65% of its current enterprise value in excess free cash over the next five years and all of its current enterprise value in excess cash by the end of the decade…” (Click Here to read the full text)
10. Coinbase Global, Inc. (NASDAQ:COIN)
Value of ARK Investment Management’s 13F Position: $497.678 million
Number of Hedge Fund Holders: 28
Coinbase Global, Inc. (NASDAQ:COIN) operates the largest cryptocurrency exchange by volume in the United States. The company operates in over 100 countries and has no physical headquarters. All the employees perform their jobs through remote work. Coinbase Global, Inc. (NASDAQ:COIN) made up 3.46% of ARK Investment Management’s portfolio in Q3 with 7.7 million shares worth $497.678 million.
On December 12, KeyBanc analyst Alex Markgraff initiated Coinbase Global, Inc. (NASDAQ:COIN)’s coverage with a Sector Weight rating. The analyst noted that the company offers a pure-play outlook to the digital asset world. He further added that Coinbase Global, Inc. (NASDAQ:COIN) provides trusted services and has a healthy capital position.
In the third quarter, 28 hedge funds held a position in Coinbase Global, Inc. (NASDAQ:COIN) with a total investment worth $976.814 million compared to 29 in the previous quarter, valued at approximately $1.2 billion.
Here is what Miller Value Partners had to say about Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2022 investor letter:
“Coinbase Global Inc. Ordinary Shares (NASDAQ:COIN) fell during the quarter as the crypto markets continued to suffer. While the company reported disappointing results, it committed to capping EBITDA losses at $500M even in the event of “a prolonged market downturn”. COIN’s ample liquidity ($6b in cash on hand) should enable them to survive a prolonged “crypto winter” and invest to strengthen the business in the downturn. While the crypto market is early in its adoption, Coinbase is focused on building the platform for crypto not only supporting trading, and cold storage, but moving into NFTs, staking, and crypto derivatives. We see tremendous upside potential for COIN over the next decade if they are able to successfully execute on their platform strategy.”
9. Block, Inc. (NYSE:SQ)
Value of ARK Investment Management’s 13F Position: $505.457 million
Number of Hedge Fund Holders: 75
Block, Inc. (NYSE:SQ) is a financial payments company founded in Missouri in 2012. On November 29, the company’s applications Square payments and Afterpay saw 61 million transactions between Black Friday and Cyber Monday Week. Afterpay alone experienced a 120% surge in usage during the week, compared to the pre-holiday period.
Block, Inc. (NYSE:SQ) was held by 75 hedge funds in Q3 and ARK Investment Management had the largest stake in the company. The firm owned close to 9.2 million Block, Inc. (NYSE:SQ) shares, valued at $505.457 million, representing 3.52% of ARK’s portfolio.
On December 13, Piper Sandler analyst Kevin Barker initiated coverage on Block, Inc. (NYSE:SQ) with an Overweight rating and a $93 price target. Barker said that the company is “very well positioned” to generate revenue and earnings growth over the coming years.
8. Teladoc Health, Inc. (NYSE:TDOC)
Value of ARK Investment Management’s 13F Position: $528.758 million
Number of Hedge Fund Holders: 27
Teladoc Health, Inc. (NYSE:TDOC) is a healthcare company that mainly focuses on telehealth. The company provides remote, on-demand health care through telephone, video services, and apps. Teladoc Health, Inc. (NYSE:TDOC) operates in over 130 countries, and by 2021, it had gathered around 40 million members.
In the last three months, Teladoc Health, Inc. (NYSE:TDOC) has been covered by 19 analysts with an average price target of $33.50, which shows a significant upside from the current stock price of $26.96. The price target of 18 out of the 19 analysts shows an upside. Only Guggenheim has a price target of $25 which is below the current price as of December 15.
In Q3, ARK Investment Management owned 12% of Teladoc Health, Inc. (NYSE:TDOC) stock, representing 3.68% of the firm’s portfolio. Cathie Wood owned over 20.858 million company shares, worth $528.758 million.
Greenhaven Road Capital made the following comment about Teladoc Health, Inc. (NYSE:TDOC) in its Q3 2022 investor letter:
“At the end of last year and the beginning of this year, I sold two of our highest multiple holdings and invested in Teladoc Health, Inc. (NYSE:TDOC), believing that swapping out of the highest multiple holdings into a lower multiple holding would provide protection in the event of multiple compression. However, the reality is that the multiple compression on currently loss-making (unprofitable) companies has been severe regardless of starting multiple, and TDOC’s lower relative starting point afforded us far less protection than I expected. We are no longer shareholders today but continue to follow the business and may return someday given its market size, product portfolio, and valuation.”
7. CRISPR Therapeutics AG (NASDAQ:CRSP)
Value of ARK Investment Management’s 13F Position: $538.296 million
Number of Hedge Fund Holders: 29
CRISPR Therapeutics AG (NASDAQ:CRSP) is a Swiss-American biotechnology company. One of its main investors is Bayer AG, a German pharmaceutical company. The company’s upcoming products include drugs for thalassemia and sickle cell disease.
CRISPR Therapeutics AG (NASDAQ:CRSP) ended the third quarter with cash, cash equivalents, and marketable securities worth $1.97 billion, down from $2.3 billion nine months ago. The company’s GAAP EPS of -$2.24 outperformed the estimates by 2 cents, while the revenues missed the forecasts by $1.77 million at $0.09 million.
The number of hedge funds that held CRISPR Therapeutics AG (NASDAQ:CRSP) stock went from 25 in the second quarter of 2022 to 29 in the third quarter. ARK Investment Management was the most significant shareholder of CRISPR Therapeutics AG (NASDAQ:CRSP) in Q3 with shares worth $538.296 million, making up 3.75% of the fund’s portfolio.
6. Intellia Therapeutics, Inc. (NASDAQ:NTLA)
Value of ARK Investment Management’s 13F Position: $540.409 million
Number of Hedge Fund Holders: 36
Intellia Therapeutics, Inc. (NASDAQ:NTLA) is an American bio-therapeutics company and takes the sixth spot in our list of best ARK stocks. ARK Investment Management remains to be the company’s top stockholder with over 9.657 million shares with a total value of $540.409 million. Intellia Therapeutics, Inc. (NASDAQ:NTLA) covers 3.76% of ARK’s portfolio.
On November 30, Intellia Therapeutics, Inc. (NASDAQ:NTLA) announced the commencement of a $250 million common stock offering between the price range of $45.80-$47.80. The offering was increased to $300 million the next day with Goldman Sachs as the sole book-running manager.
Out of 18 analysts that have covered Intellia Therapeutics, Inc. (NASDAQ:NTLA)’s stock in the last three months, 14 maintain a Buy or Overweight rating on the company stock. Their average price target is $100 compared to the stock price of $36.00 at the time of writing. The lowest forecast was $50, given by the sell-side analyst David Lebovitz of Citigroup, which still shows a 37.7% upside as of December 15.
Just like Tesla, Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Roku, Inc. (NASDAQ:ROKU), Intellia Therapeutics, Inc. (NASDAQ:NTLA) is also one of the best ARK stocks.
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Disclosure: None. 14 Best ARK Stocks To Buy Now is originally published on Insider Monkey.
