Cathie Wood didn’t do a lot of trading last week, but the co-founder, CEO, and widely followed stock picker at Ark Invest changed her tune coming out of the Memorial Day holiday weekend, adding to 10 of her existing positions.
What is she buying? Some of the more interesting purchases for Ark Invest on Tuesday were UiPath (NYSE: PATH), Roblox (NYSE: RBLX), and Advanced Micro Devices (NASDAQ: AMD). Wood thinks this is a good time to add to these stakes. Let’s take a closer look.
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 reports its fiscal first-quarter results after the market close on Wednesday.
The stock has been a market laggard this year, down 25% so far in the 2024 calendar year. Analysts are holding out for marginal improvement on the adjusted bottom line with a 15% increase in revenue for this week’s report. This is half the 31% top-line jump it posted in its previous financial update.
The bad news is that UiPath is slowing after posting accelerating revenue growth through all four quarters of fiscal 2024. The good news is that it’s hard not to be bullish on the future of robotics. The pandemic helped shine a light on a manpower shortage that could’ve been easier to survive if there were more automation in the workplace. Rising labor costs should also bring more enterprises to UiPath’s door.
Investors will be hoping for another beat out of UiPath on both ends of the income statement shortly after Wednesday’s closing bell. It has trounced adjusted earnings profit targets over the past year. You should also keep an eye on UiPath’s dollar-based net retention rate. It’s a great metric that shows how much returning customers are spending on a platform over the past year compared to the previous 12-month period. It was 119% in March, meaning that returning customers are spending 19% more on average than they were a year earlier. The stock has declined 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 higher if it exceeds expectations.
2. Roblox
Another popular Wood holding that has had a rough 2024 is Roblox. The shares are down 27% this year, but it’s still the sixth-largest holding across the combined assets of Ark Invest funds.
The latest hit for the online gaming platform came earlier this month when it posted weak guidance in its latest financial update. It sees bookings growth and free cash flow contracting sequentially. The platform is showing signs of life. The 77.7 million daily active users it was entertaining in its May report is a 17% increase from where it was a year ago. Monetization is also on the rise, as its premium-paying customers have climbed 13% over the past year.
Red ink and fears that the young audience on Roblox will age out are weighing on Roblox. However, good things happen when you’re growing your audience and your revenue at a double-digit-percentage clip.
3. Advanced Micro Devices
After three consecutive years of at least 44% revenue growth, Advanced Micro Devices proved mortal last year. Revenue and net income declined 4% and 35%, respectively, in 2023. Investors were willing to look at the bigger picture, sending AMD’s stock to more than double.
It helps that AMD’s business turned positive again in the second half of this year. The upticks continue so far in 2024. It also helps that AMD’s management has painted a rosy portrait of its sales potential related to artificial intelligence. Despite the positive momentum, the stock is down 25% from the all-time high it hit just two months ago. It’s a dip that Wood doesn’t mind buying.
Should you invest $1,000 in UiPath right now?
Before you buy stock in UiPath, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and UiPath wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $697,878!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 28, 2024
Rick Munarriz has positions in UiPath. The Motley Fool has 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
