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If you’re looking for proof of how quickly sentiment changes in the stock market, look no further than Cathie Wood’s ARK Investment Management funds. Last year, it seemed like Wood could do no wrong, as she selected some of the biggest winners in the growth space for the company’s exchange-traded funds (ETFs). It got to the point where day traders were checking the ARK buy and sell list at the end of each trading day for ideas.
Fast forward to 2021 and things have changed in a big way. Most of the ARK ETFs are down 30% or more from their 52-week highs as many of the massive winners in growth last year have entered bear market territory. Sentiment surrounding the growth space is lower than it has been for a while, and a lot of Wood’s favorite stocks simply cannot find a bid.
With that said, it’s important to remember that Cathie Wood has a long-term time horizon and that her funds have put up incredible performance over the past year. The bottom line is that she is a talented stock picker with an eye for innovative growth companies. There are even some Cathie Wood stocks that look primed for a bounce and perhaps even more at this time.
Let’s take a look at two Cathie Wood stocks rising from the ashes.
Square (NASDAQ: SQ)
First up is Square, an innovative fintech company that helps entrepreneurs and small business owners with payment processing services. Square seamlessly combines software and hardware to enable sellers to turn mobile and computing devices into point-of-sale solutions. The stock has been facing heavy selling pressure over the last few months, especially due to its exposure to Bitcoin, but has just reclaimed the 200-day moving average. Square stock could even have found a short-term bottom, especially since the company just announced positive news that it will offer checking and savings accounts for small and mid-sized firms.
Shopify (NYSE: SHOP)
Another Cathie Wood favorite that is rising from the ashes of the recent weakness in growth is Shopify. This is a company that offers a unique cloud-based multichannel, e-commerce platform. Shopify essentially helps business owners efficiently run their operations online, in-store and on social media. The company reported stellar Q1 earnings that included gross merchandise volume growth of 114% year-over-year. The stock sold off hard after the earnings release but has since bounced back nicely and could be headed for higher prices in the coming weeks.
Picking the bottom when sentiment is not working in a stock’s favor is difficult, and that has been the case with many of these Cathie Wood stocks in 2021. However, both of the stocks mentioned above are showing promising signs that they could be on the road to recovery. If you want to gain more confidence in your stock selection, consider using bottom-up analysis that involves looking at things such as financial ratios, earnings growth, free cash flow, and the products and market for a company.
While this can be a time-consuming task, using a platform like StockDweebs can make your analysis a lot easier. The company uses tried-and-true strategies based on solid research to find undervalued stocks that can deliver huge returns. Whether it’s growth stocks, dividend stocks, or stocks under $30, StockDweebs could be a great way to boost your stock-picking skills. Make sure to check its website out for more details and to sign up for its free plan.
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