Cathie Wood Is Buying These Top Growth Stocks — and Both Could … – The Motley Fool

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In December, shopping was on the agenda for a lot of us, including superstar investor Cathie Wood. But you probably didn’t bump into Wood at the local mall. Wood did her shopping at a place where bargains were even bigger. I’m talking about the stock market.
Top growth stocks tumbled in the double-digits last year. And Wood saw that as a buying opportunity. She’s known for investing in innovative companies that will grow a portfolio over time, and the strategy has worked.
Wood’s ARK Innovation ETF soared more than 500% over the five-year period that ended in 2020. Wood’s recent purchases for her funds include two stocks in particular that could boost her performance — and help make you rich over time, too. Let’s check them out.
CRISPR Therapeutics (CRSP 9.29%) works in the innovative area of gene editing. The company’s technology alters faulty genes responsible for disease. CRISPR doesn’t yet have products on the market, but that may be about to change.
The biotech company and partner Vertex Pharmaceuticals are submitting exa-cel, a gene editing treatment candidate for blood disorders, to regulators right now. This could be a major step for CRISPR. First, a regulatory nod for exa-cel would confirm that CRISPR’s technology works, and that may encourage more investors to get in on this exciting story.
Second, an approval would lead to product revenue that could be significant. Treatment options for blood disorders beta thalassemia and sickle cell disease are currently limited, and exa-cel is a one-time curative option. So, it could be popular with doctors and patients. Product revenue is likely to support the development of CRISPR’s other programs, too.
Speaking of other programs, CRISPR recently reported positive data from a phase 1 trial of an immuno-oncology candidate. CTX110 led to long-term complete remission for patients with large B-cell lymphoma. The company is now moving that candidate on to phase 2, and CRISPR has more than a dozen other candidates in the pipeline.
CRISPR shares traded more than 4 times higher than today’s level just a couple of years ago — when there was less visibility about product revenue. Potential approvals may push the shares back to those highs. And this time, based on product approvals and revenue, the gains could be lasting.
Tesla (TSLA 4.44%) shares sank 65% last year. Investors worried about competition in the electric vehicle (EV) market and economic headwinds. But Tesla has demonstrated it can keep its lead — and increase sales in spite of challenges like inflation and supply chain issues.
First, let’s talk market share. The EV maker holds 65% of the U.S. market and a whopping 86% of the luxury EV market, according to S&P Global Mobility. Plenty of rivals populate the space, but Tesla has the lead and the brand strength that could ensure its position over the long haul. And it’s recently ramped up its manufacturing capacity with two enormous plants that should help it satisfy demand.
As for sales and deliveries, Tesla has shown that it can perform in difficult times. In the third quarter, the company reported record revenue, operating profit, and free cash flow. Tesla’s operating margin topped 17% — among the highest in the industry.
Deliveries climbed 40% last year to more than 1.3 million, the EV giant said earlier this week. And fourth-quarter deliveries rose 31%.
So, there are plenty of reasons to be optimistic Tesla can continue to grow earnings as the economic situation improves — and eventually meet long-term delivery goals. The company aims to reach 50% average annual growth in vehicle deliveries over time.
Today, Tesla shares trade for 29 times forward earnings estimates. That’s compared to more than 80 a year ago.
At this price, and considering the points above, I can understand why Cathie Wood steadily added to her Tesla holdings throughout the month of December. This top growth stock has what it takes to rebound and grow in value. And that could be great news for Wood’s portfolio — and yours — over the long haul.
Adria Cimino has positions in Tesla and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics, Tesla, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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