Cathie Wood hasn’t traded much over the past week, but the co-founder, CEO and widely followed stock picker at Ark Invest changed her tune over the Memorial Day holiday weekend, adding 10 of her existing positions.
What does she buy? Some of the more interesting buys for Ark Invest on Tuesday were UiPath (NYSE: PAD), Roblox (NYSE: RBLX)And Advanced micro devices (NASDAQ: AMD). Wood thinks now is a good time to expand this commitment. Let’s take a closer look at that.
1. UiPath
Timing is everything when it comes to robotics. The same can be said about timing and robotics stocks. Wood added more UiPath to her portfolio on Tuesday. The provider of software solutions for robotics and automation will publish its fiscal first quarter results on Wednesday after the stock market closes.
The stock has lagged the market this year, down 25% so far in calendar year 2024. Analysts are pegging a marginal improvement in adjusted operating income, with revenue up 15% for this week’s report. This is half of the 31% revenue increase the company posted in its previous financial update.
The bad news is that UiPath is slowing after accelerating revenue growth in all four quarters of fiscal 2024. The good news is that it’s hard not to be optimistic about the future of robotics. The pandemic helped shine a light on a labor shortage that would have been easier to survive if there had been more automation in the workplace. Rising labor costs should also bring more companies to UiPath.
Investors will be hoping for another UiPath win on both sides of the income statement shortly after Wednesday’s closing bell. Over the past year, it has exceeded adjusted earnings targets. Also keep an eye on UiPath’s dollar-based net retention rate. It’s a great metric that shows how much returning customers spent on a platform over the past year compared to the previous twelve-month period. In March this was 119%, meaning that returning customers spent an average of 19% more than a year earlier. The stock has fallen in four of the first five months of this year, so expectations aren’t high heading into earnings season. It’s a good place to be, giving UiPath a good chance to move up if it exceeds expectations.
2. Roblox
Another popular lumber company that has had a tough 2024 is Roblox. Its shares are down 27% this year, but it is still the sixth largest holding by the combined assets of the Ark Invest funds.
The latest hit for the online gaming platform came earlier this month, when it published weak guidance in its latest financial update. It sees bookings growth and free cash flow declining sequentially. The platform is showing signs of life. The 77.7 million daily active users listed in the May report is a 17% increase from a year ago. Monetization is also increasing as the number of premium paying customers has increased by 13% in the past year.
Red ink and the fear that Roblox’s young audience will age are weighing on Roblox. However, good things happen when you grow your audience and revenue at a double-digit rate.
3. Advanced micro devices
After three consecutive years of at least 44% revenue growth, Advanced Micro Devices turned out to be mortal last year. Turnover and net result fell by 4% and 35% respectively in 2023. Investors were willing to look at the bigger picture, causing AMD’s shares to more than double.
It helps that AMD’s business turned positive again in the second half of this year. The increases continue so far into 2024. It also helps that AMD management has painted a rosy portrait of its sales potential in artificial intelligence. Despite the positive momentum, the stock is down 25% from its all-time high just two months ago. It’s a dip that Wood would like to buy.
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Rick Munarriz holds positions in UiPath. The Motley Fool holds positions in and recommends Advanced Micro Devices, Roblox, and UiPath. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
