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12 Best ARK Stocks To Buy Now

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·14 min read
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In this article, we discuss the 12 best ARK stocks to buy now. If you want to skip our detailed review of Cathie Wood's stock picks and hedge fund performance, go directly to 5 Best ARK Stocks To Buy Now.

Founder and boss at ARK Investment Management, Cathie Wood has had a difficult start to the year. Last time the global markets faced upheaval during 2020, Wood came out as one of the best performing hedge fund managers and returned 170% in the year. This time around, the negative markers are less unique than a pandemic, with sky-high inflation, rising interest rates, and geopolitical tensions turning investors away from risky, growth stocks. Her flagship ARK Innovation ETF (NYSE:ARKK) has fallen by more than 53% since the start of the year, and her portfolio size has shrunk from $33.08 billion at the end of December 2021 to $23.95 billion at the end of Q1 2022.

Even while the market sends her stock picks tumbling down, Cathie Wood is doubling up on her bets, stating that these innovative companies are trading in 'deep value territory'. Coinbase Global, Inc. (NASDAQ:COIN) is down 70% since the start of the year amid collapsing cryptocurrency prices, but Wood recently increased her stake in the crypto platform by 29%. This goes to show that Wood is not giving up on her vision for the future of tech, and this self-belief is continuing to attract investors to her fund. It has recorded inflows of approximately $1.3 billion so far in 2022, and also recently posted four consecutive weeks of positive inflows, including $455.7 million in the week ending May 4.

12 Best ARK Stocks To Buy Now
12 Best ARK Stocks To Buy Now

Cathie Wood of ARK Investment Management

Let's now take a look at the top stocks to buy according to Cathie Wood's ARK Investment Management. Some of her top stock picks include Tesla, Inc. (NASDAQ:TSLA), Teladoc Health, Inc (NYSE:TDOC), and Roblox Corporation (NYSE:RBLX), along with others mentioned below.

Our Methodology

The following stocks have been picked according to the Q1 2022 portfolio of Cathie Wood's ARK Investment Management. These are the top 12 holdings of the fund as of the end of the first quarter.

Best ARK Stocks To Buy Now

12. Intellia Therapeutics, Inc. (NASDAQ:NTLA)

ARK Investment Management’s 13 Portfolio: 2.72% ARK Investment Management’s Stake Value: $652.65 million Number of Hedge Fund Holders: 35

Intellia Therapeutics, Inc. (NASDAQ:NTLA) is a genome-editing company which develops therapeutics that can edit disease-associated genes in the human body. According to 13F filings for the first quarter, ARK Investment Management owned 8.98 million shares of Intellia Therapeutics, Inc. (NASDAQ:NTLA) at a value of $652.7 million, representing 2.72% of its total portfolio.

Investors were seen buying up on Intellia Therapeutics, Inc. (NASDAQ:NTLA) shares. At the end of March, 35 hedge funds reported ownership of stakes in the company, up from 31 a quarter earlier.

Oppenheimer analyst Jay Olson in early May kept an 'Outperform' rating on Intellia Therapeutics, Inc. (NASDAQ:NTLA) shares, and cut the price target to $130 from $160. Olson sees the firm's emerging profile of drugs as encouraging, and believes it supports curative potential.

For Q1 2022, Intellia Therapeutics, Inc. (NASDAQ:NTLA) disclosed earnings per share of -$1.96, which missed consensus estimates by $0.85. Quarterly revenue stood at $11.3 million, exceeding analysts' forecasts by $2.7 million, and signalling an increase of 74.58% from the year-ago quarter.

Investment firm Carillon Tower Advisers discussed Intellia Therapeutics, Inc. (NASDAQ:NTLA) in its Q2 2021 investor letter, stating:

Intellia Therapeutics is a clinical-stage genome editing company focused on the development of proprietary, potentially curative therapeutics. The company’s stock soared after announcing positive interim data from an ongoing phase 1 clinical study of its in vivo gene editing candidate, which is being developed as a single-dose treatment for hereditary transthyretin (ATTR) amyloidosis. This specific form of therapy would be the first of its kind resulting in the precision editing of a gene in a target tissue in the human body.”

Along with Tesla, Inc. (NASDAQ:TSLA), Teladoc Health, Inc (NYSE:TDOC), and Coinbase Global, Inc. (NASDAQ:COIN), Intellia Therapeutics, Inc. (NASDAQ:NTLA) is a prominent stock in the portfolio of disruptive tech investor Cathie Wood.

11. Spotify Technology S.A. (NYSE:SPOT)

ARK Investment Management’s 13 Portfolio: 2.76% ARK Investment Management’s Stake Value: $662.72 million Number of Hedge Fund Holders: 49

Spotify Technology S.A. (NYSE:SPOT) operates the world's largest audio streaming platform with over 406 million monthly active users and 180 million premium subscribers. Wood owned 4.38 million shares of Spotify at the end of Q1 2022, up 10% from the quarter before where she held 4.01 million shares of the company.

On April 29, Citi analyst Jason Bazinet maintained a 'Buy' rating on Spotify Technology S.A. (NYSE:SPOT) shares, and decreased the price target to $165 from $240. At current price levels, Bazinet feels that the market isn't sufficiently valuing Spotify's emerging businesses and the potential for future growth in its paid music streaming business.

For the quarter ending March, Spotify Technology S.A. (NYSE:SPOT) disclosed an EPS of $0.22, above estimates by $0.45. The company raked in $2.81 billion in revenue for the first quarter, exceeding expectations by $28.1 million.

The Q1 database of Insider Monkey showed that 49 hedge funds were shareholders of Spotify Technology S.A. (NYSE:SPOT) with combined positions worth $1.9 billion. In contrast, 53 hedge funds owned $3.46 billion worth of stakes in the preceding quarter.

Here is what Rowan Street Capital LLC, an investment firm, had to say about Spotify Technology S.A. (NYSE:SPOT) in its Q1 2022 investor letter:

Let’s run through our top holdings in order to visualize what happened to their stocks in relation to the fundamentals of their underlying businesses:

We have owned Spotify (NYSE:SPOT) stock since its IPO year in 2018, and this company continued to be one of our highest long-term convictions despite the recent drawdown in the stock. We had outlined our investment thesis for SPOT in our H1 2021 Letter and in Q2 2020 Letter (we encourage you to review those). We believe there is great future for this company beyond what you can see and hear today!”

10. UiPath Inc. (NYSE:PATH)

ARK Investment Management’s 13 Portfolio: 3.02% ARK Investment Management’s Stake Value: $725.44 million Number of Hedge Fund Holders: 33

UiPath Inc. (NYSE:PATH) operates a software platform which automates business processes, serving clients in the healthcare, telecommunication, finance, and banking industries around the world. ARK Investment Management, according to its Q1 portfolio, owned 33.6 million shares of the firm at a price tag of roughly $725 million, amounting to a 3.02% slice of its total portfolio.

On May 28, Cowen analyst Bryan Bergin lowered the firm's price target on UiPath Inc. (NYSE:PATH) to $27 from $43 and kept an 'Outperform' rating on the company shares. The analyst reaffirmed his revenue growth, margin and ARR (annual recurring revenue) forecasts for the firm, but revised the price target owing to sector multiple compression.

9. Unity Software Inc. (NYSE:U)

ARK Investment Management’s 13 Portfolio: 3.41%  ARK Investment Management’s Stake Value (As of the end of Q1): $817.90 million Number of Hedge Fund Holders: 39

Unity Software Inc. (NYSE:U) is a video game software developer based in California. At the close of Q1 2022, Cathie Wood's stake in the company amounted to 3.41% of her total portfolio, and was worth roughly $818 million. In total, 39 hedge funds were long on Unity Software Inc. (NYSE:U) shares at the end of March, up from 36 hedge funds in the quarter before.

For the first quarter, Unity Software Inc. (NYSE:U) reported EPS figures in-line with estimates, coming in at -$0.08. Its revenue for the quarter was registered at $320.1 million, underperforming analysts' forecasts by $1.02 million, but showing a 36.4% jump from the year-ago quarter.

On May 11, Wedbush analyst Michael Pachter reiterated an ‘Outperform’ rating on Unity Software Inc. (NYSE:U) shares, and slashed the price target to $70 from $125. He noted that the shares slumped after temporary data engineering issues in its tech stack resulted in losses during the first quarter, forcing the company to negatively revise its 2022 guidance. However, Pachter believes the firm will resolve this issue by the end of the year, and regain its trajectory of 30% or higher growth in annual revenue.

Investment firm ClearBridge Investments talked about Unity Software Inc. (NYSE:U) and its prospects in a Q1 2022 letter to investors. The fund said:

“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.

8. Twilio Inc. (NYSE:TWLO)

ARK Investment Management’s 13 Portfolio: 3.45%  ARK Investment Management’s Stake Value: $827.55 million Number of Hedge Fund Holders: 75

Twilio Inc. (NYSE:TWLO) operates a cloud communications platform which enables customers to build customer engagement tools within software. Wood held 5.02 million shares of the firm priced at roughly $827.6 million, representing 3.45% of her total Q1 2022 portfolio.

A detailed review of the 900+ elite hedge funds in the database of Insider Monkey found that 75 hedge funds were long Twilio Inc. (NYSE:TWLO) at the end of Q1 2022. The aggregate value of these positions was recorded at $3.25 billion. In comparison, 80 hedge funds held stakes in the company at the end of the fourth quarter.

On May 23, Jefferies analyst Samad Samana lowered the firm's price target on Twilio Inc. (NYSE:TWLO) to $130 from $175, and maintained a 'Buy' rating on the company shares. The analyst revised the price target for several software companies in his coverage on account of the current volatility in the macro backdrop.

For the first quarter, Twilio Inc.'s (NYSE:TWLO) EPS outperformed estimates by $0.21. The company's quarterly revenue increased 48.37% year-on-year, coming in at $875.4 million which was above forecasts by $11.6 million.

Investment firm RiverPark Funds discussed the performance and prospects of Twilio Inc. (NYSE:TWLO) in its Q4 2021 investor letter. Here's what the fund said:

Twilio: TWLO shares were also down sharply to end the year. Just like after 1Q and 2Q, despite another quarterly beat in 3Q, management guidance–which we believe to be conservative– disappointed some investors. Third quarter revenue of $740 million was up 65% year over year, significantly exceeding management’s guidance of 50%-52% revenue growth. Management guided 4Q21 revenue to +40% revenue growth, which was ahead of sell side expectations, but likely below buy side expectations. Investors were also troubled by the departure of COO George Hu, who has been credited with rebuilding Twilio’s sales and marketing teams after arriving from SaleForce.com shortly after the company’s IPO in 2016.

The COVID crisis has accelerated the adoption of the company’s cloud-based, integrated communications platform that allows companies in a wide range of businesses to embed digital communications capabilities (video, chat, voice, SMS, fax, and email) into their customer facing applications without needing to build back-end infrastructure and interfaces. Twilio’s total addressable market is now greater than $40 billion, which should grow by 50% over the next few years, providing a strong secular tailwind for the company. We expect the company’s gross margin to continue to expand from 54% in the second quarter toward management’s long-term goal of 60%-65%, and, as the company grows to scale, we expect its non-GAAP operating margin to expand to 25%.”

7. Zoom Video Communications, Inc. (NASDAQ:ZM)

ARK Investment Management’s 13 Portfolio: 4.11% ARK Investment Management’s Stake Value: $986.39 million Number of Hedge Fund Holders: 43

Zoom Video Communications, Inc. (NASDAQ:ZM) operates a video communications platform. It was Cathie Wood's star performer during the Covid pandemic, rising more than 405% in 2020. It lost steam as the world re-opened after the Covid lockdowns, but Cathie Wood still maintains a long-term bullish view on the company shares. She increased her stake in Zoom Video Communications, Inc. (NASDAQ:ZM) by 23% during the first quarter, owning 8.41 million shares valued at $986 million.

Its revenue for the first quarter stood at $1.07 billion, above market estimates by roughly $526,000. Zoom Video Communications, Inc. (NASDAQ:ZM) posted earnings per share of $1.03 for Q1 2022, outperforming consensus estimates by $0.16.

On May 24, Morgan Stanley analyst Meta Marshall noted that sentiment on Zoom Video Communications, Inc. (NASDAQ:ZM) was "overwhelmingly negative" after its Q1 report. The analyst feels the market is overlooking the company's attractive business model, and the fact that video demand continues to prove durable. She feels that the company "rebutted concerns" with its latest quarterly earnings, and gave the stock an 'Overweight' rating with a $140 price target.

43 hedge funds reported bullish bets on Zoom Video Communications, Inc. (NASDAQ:ZM) at the close of Q1 2022, as compared to 48 hedge funds in the previous quarter. The total value of Q1 holdings stood at $3.16 billion.

6. EXACT Sciences Corporation (NASDAQ:EXAS)

ARK Investment Management’s 13 Portfolio: 4.18% ARK Investment Management’s Stake Value: $1.00 billion Number of Hedge Fund Holders: 32

EXACT Sciences Corporation (NASDAQ:EXAS) is a biotech firm which provides cancer screening and diagnostic test products in the United States and around the globe. Cathie Wood's ARK Investment Management was the largest Q1 shareholder of the firm, with a $1 billion stake which consisted of 14.32 million shares.

Baird analyst Catherine Ramsay Schulte in late April gave EXACT Sciences Corporation (NASDAQ:EXAS) an 'Outperform' rating, and cut the price target to $90 from $100. The analyst feels the company's core business is well-positioned in the market, and advances in its multi-cancer program could potentially drive shares meaningfully higher over the next 12 months.

The company's EPS figures for the first quarter missed estimates by $0.14. EXACT Sciences Corporation (NASDAQ:EXAS) recorded a revenue of $486.6 million for the quarter, outperforming estimates by $26.7 million.

32 hedge funds held combined positions worth $1.53 billion in EXACT Sciences Corporation (NASDAQ:EXAS) at the end of March. This is down from 34 hedge funds a quarter ago.

Here is what RiverPark Funds, an investment firm, had to say about EXACT Sciences Corporation (NASDAQ:EXAS) in its Q4 2021 investor letter:

Exact Sciences: EXAS shares declined on a disappointing recovery in Cologuard screening due to COVID. Despite continued revenue growth from Precision Oncology and COVID testing, and Cologuard screening revenue growth of 30%, COVID restrictions limited access to physicians’ offices for the company’s and its Pfizer Joint Venture sales force as well as causing a severe drop off of in-person wellness visits.

In the last year, Exact has also pivoted the company significantly from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) to multi-cancer screening through its Thrive acquisition, and to minimal residual disease and recurrence monitoring through its Ashion and Tardis acquisitions. Through this pivot, Exact has tripled its market opportunity from $20 billion to $60 billion.”

In addition to Tesla, Inc. (NASDAQ:TSLA), Teladoc Health, Inc (NYSE:TDOC), and Coinbase Global, Inc. (NASDAQ:COIN), EXACT Sciences Corporation (NASDAQ:EXAS) is a popular stock among hedge funds in 2022.

Click to continue reading and see 5 Best ARK Stocks To Buy Now.    

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Disclosure. None. 12 Best ARK Stocks To Buy Now is originally published on Insider Monkey.