10 Best Stocks to Buy and Hold For 5 Years According to Cathie Wood

2. Roku, Inc. (NASDAQ:ROKU)

Ark Investment’s Q4 2020 Investment Stake: $1.7 billion

Number of Q1 2024 Hedge Fund Investors: 39

Share Price Performance Since 2020 End: -81.85%

Roku, Inc. (NASDAQ:ROKU) is a new age consumer electronics and media company that seeks to leverage the growth in online streaming. It sells hardware that enables users to use its platform to stream television content. As a result, central to Roku, Inc. (NASDAQ:ROKU)’s story is the ability to make money from its platform. For the streaming media industry, this means that a handful of avenues are available to make money. Apart from recurring subscription fees, central to Roku, Inc. (NASDAQ:ROKU)’s success is a growth in the shift to streaming from traditional televisions. The greater this shift is, and the better deals that it can strike with advertisers, the more money Roku, Inc. (NASDAQ:ROKU) can make and lead to juicy gains for investors.

Roku, Inc. (NASDAQ:ROKU) is another classic Cathie Wood long term play. Her firm first bought the shares in 2019 according to Insider Monkey’s data when it acquired a $7 million stake. Since then, the stake has grown by more than 10x. O’keefe Stevens Advisory mentioned the firm in its Q1 2024 investor letter where it shared:

ROKU – An idea that would have seemed unthinkable just a few years back when low P/E or low multiple meant the stock was cheap. Roku is free-cash-flow positive, EBITDA breakeven, and GAAP Net Income unprofitable. Historically, investors tend to shy away from unprofitable businesses. Deeming them too risky. Roku has a $2B net cash position and is reinvesting in the business, grabbing Connected TV market share. Geographic expansion takes time and capital. They have a dominant share and have many tailwinds. Walmart’s acquisition of Vizio adds to the already heightened uncertainty. We can’t remember seeing a company with such “negative” sell-side coverage. 9 buys, 10 holds, and 4 sells. Nearly all reports discuss weighting for clarity, which is why the opportunity exists. Wells Fargo has the lowest price target at $45, or 26% downside. We see a reasonable case for a $100 stock in the near term and long term, owning a compounder with an attractive business model, secular tailwinds, and dominant market share that can translate into a desirable return over the next several years.