In this article, we discuss 5 stocks to watch as Cathie Wood’s fund starts to rebound. If you want to read about other hot stocks in Wood’s portfolio, go directly to Cathie Wood’s Fund Starts to Rebound: 10 Stocks to Watch.
5. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 36
Gain in Share Price Over Past Month as of July 14: 37.00%
Teladoc Health, Inc. (NYSE:TDOC) markets virtual healthcare services and is headquartered in New York. Regulatory filings reveal that ARK owned over 20 million shares of Teladoc Health, Inc. (NYSE:TDOC) at the end of March 2022 worth $691 million, representing 4.09% of the fund’s total portfolio value. Teladoc provides virtual health services for conditions such as diabetes, hypertension, chronic kidney disease, cancer, congestive heart failure, and mental health disorders.
On July 7, Piper Sandler analyst Jessica Tassan maintained an ‘Overweight’ rating on Teladoc Health, Inc. (NYSE:TDOC) stock with a price target of $42, noting the firm was on track to deliver an inline second quarter print in the chronic care business.
At the end of the first quarter of 2022, 36 hedge funds held stakes worth $1.9 billion in Teladoc Health, Inc. (NYSE:TDOC), compared to 39 in the previous quarter with positions worth $2.4 billion.
In its Q1 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE:TDOC) was one of them. Here is what the fund said:
“Teladoc Health, Inc. (NYSE:TDOC) is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and Teladoc Health, Inc. (NYSE:TDOC) is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).
Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc Health, Inc. (NYSE:TDOC).”
4. Exact Sciences Corporation (NASDAQ:EXAS)
Number of Hedge Fund Holders: 32
Gain in Share Price Over Past Month as of July 14: 25.98%
Exact Sciences Corporation (NASDAQ:EXAS) provides medical diagnostic test products. The latest data shows that ARK owned close to 15 million shares of Exact Sciences Corporation (NASDAQ:EXAS) at the end of March 2022 worth $745 million, representing 4.41% of the total value of its 13F portfolio. In late April, the company posted its financial results for the first quarter of 2022, reporting revenue of $486 million, up 21% over the same period last year and beating analyst estimates by $26 million.
On July 5, Evercore ISI analyst Vijay Kumar maintained an ‘Outperform’ rating on Exact Sciences Corporation (NASDAQ:EXAS) stock and lowered the price target to $60 from $100, adding the firm to the ‘Tactical Outperform’ list of the investment advisory.
At the end of the first quarter of 2022, 32 hedge funds tracked by the database of Insider Monkey held stakes worth $1.5 billion in Exact Sciences Corporation (NASDAQ:EXAS), compared to 34 funds in the previous quarter with $1.7 billion in holdings.
In its Q3 2021 investor letter, RiverPark Advisors, LLC, an asset management firm, highlighted a few stocks and Exact Sciences Corporation (NASDAQ:EXAS) was one of them. Here is what the fund said:
“Exact Sciences: Exact Sciences Corporation (NASDAQ:EXAS) shares declined on a disappointing recovery in Cologuard screening due to COVID. Despite continued revenue growth from Precision Oncology and COVID testing, and Cologuard screening revenue growth of 30%, COVID restrictions limited access to physicians’ offices for the company’s and its Pfizer Joint Venture sales force as well as causing a severe drop off of in-person wellness visits.
In the last year, Exact has also pivoted the company significantly from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) to multi-cancer screening through its Thrive acquisition, and to minimal residual disease and recurrence monitoring through its Ashion and Tardis acquisitions. Through this pivot, Exact Sciences Corporation (NASDAQ:EXAS) has tripled its market opportunity from $20 billion to $60 billion.”
3. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 84
Gain in Share Price Over Past Month as of July 14: 6.38%
Block, Inc. (NYSE:SQ) provides payment services. Regulatory filings reveal that ARK owned over 9 million shares of Block, Inc. (NYSE:SQ) at the end of March 2022 worth $799 million, representing 4.72% of its 13F portfolio’s weighting. On July 13, the firm announced that it was partnering with prestigious beauty omni-retailer Sephora in a deal that would give customers of the latter the choice to pay for products through four installments. Sephora customers can use the Afterpay services of Block to buy products under the deal.
On July 11, Keefe Bruyette analyst Sanjay Sakhrani maintained an ‘Outperform’ rating on Block, Inc. (NYSE:SQ) stock and lowered the price target to $100 from $150, noting that lowering market multiples and macro uncertainty were reducing targets across the board.
At the end of the first quarter of 2022, 84 hedge funds held stakes worth $6.1 billion in Block, Inc. (NYSE:SQ), compared to 96 funds with $5.9 billion in stakes a quarter earlier.
In its Q1 2022 investor letter, Farrer Wealth Advisors, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:
“Block, Inc. (NYSE:SQ) (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, Inc. (NYSE:SQ), the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”
2. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 34
Gain in Share Price Over Past Month as of July 14: 17.14%
Roku, Inc. (NASDAQ:ROKU) owns and runs a TV streaming platform. The hedge fund chaired by Wood owned close to 10 million shares of Roku, Inc. (NASDAQ:ROKU) at the end of March 2022 worth $962 million. The company has more than 60 million active accounts and offers services such as digital and video advertising, content distribution, subscription, and billing services, as well as other commerce transactions. It is based in California and was founded in 2002.
On July 12, Guggenheim analyst Michael Morris maintained a ‘Buy’ rating on Roku, Inc. (NASDAQ:ROKU) stock and lowered the price target to $115 from $145, noting that “industry discussions continue to reflect incremental softness in ad demand”.
At the end of the first quarter of 2022, 34 hedge funds held a combined $1.7 billion in Roku, Inc. (NASDAQ:ROKU) shares, down from 43 funds in the preceding quarter with $2.2 billion in shares.
In its Q3 2021 investor letter, RGA Investment Advisors, an asset management firm, highlighted a few stocks and Roku, Inc. (NASDAQ:ROKU) was one of them. Here is what the fund said:
“Since we bought Roku, Inc. (NASDAQ:ROKU), no stock has contributed more to our returns and no stock has been more volatile in our portfolio. This is now our third drawdown in the stock of over 30% and our second of over 60%. Fortunately (or tactically) before the two 60% drawdowns we had trimmed our positions by at least a third, though unfortunately that meant we still held large slices of the stock on the way down. Despite the stock having soared too far, too fast and thinking it was due for a period of digestion, we believe over our timeframe even the former highs will be rewarded with a good result. We have often pointed out that volatility in companies like Roku is the market’s way of grappling with a really wide range of potential outcomes and that remains as true today as ever, though the range of outcomes continues to narrow for the better for Roku.
Roku, Inc. (NASDAQ:ROKU) today is trading at lower multiples than at any point as a public company, meanwhile its revenue and margin composition has evolved from majority hardware to vast majority platform– in other words, each $1 of revenue is much more valuable today than ever before for Roku. Roku today is a profitable company for the first time in its history. Roku today has a multitude of investment opportunities within its own platform that can drive considerable value. Early in 2021 at higher prices, one had to believe the company would grow accounts internationally to justify valuations. This was so, because the company has so quickly achieved substantial penetration of the US market with 56.4m reported household customers of the ~130m total US households, that further growth in the US household count will be challenging and because prices were so high. Today, one merely needs to believe that with around 60 million households (the expectation for the yet reported year-end 2021 number), ARPU has a strong enough growth tailwind to reach $100 within a reasonable time, without relying on any incremental account growth. For context, as of Q3 this year, ARPU was $40, up 49% year-over-year and we know it will be higher in Q4. Growth in ARPU is underpinned by the continuing migration of viewer hours to CTV. The subforces behind this are increasing the penetration of Roku devices within households (go from one Roku to TV to 2-4), increasing the hours that each house watches (getting from shy of 4 hours to the nearly 8 hours an average American household watches TV) and broadening the content on the platform, increasing the share of inventory with content companies and more hours (like live sports viewing) shifting from linear to CTV. We further believe the opportunity to become the bundler and/or hub of household content subscriptions is growing, as evidenced by the rise in credit card pings per user from 1 to 1.3 per month and its continuing ascension. In this respect, Roku has the right to win with their installed base, because the experience is exponentially better than legacy and competing offerings…” (Click here to see the full text)
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Gain in Share Price Over Past Month as of July 14: 7.31%
Tesla, Inc. (NASDAQ:TSLA) markets electric vehicles and clean energy solutions. The latest regulatory data shows that ARK owned close to 1.4 million shares of Tesla, Inc. (NASDAQ:TSLA) at the end of March 2022 worth $1 billion, representing 6.47% of the value of the fund’s 13F portfolio. On July 13, news agency Reuters reported that Panasonic, a key EV battery supplier for Tesla, was seeking to increase the energy density of each battery it supplies to the EV maker by 20% by the end of this decade. The change would boost the range of a Tesla EV by over 100 kilometers.
On July 13, Truist analyst William Stein initiated coverage of Tesla, Inc. (NASDAQ:TSLA) stock with a ‘Buy’ rating and a price target of $1,000, backing the firm to “capture the pole position” in terms of unit share among EV auto makers and sell 10 million units per year by 2030.
At the end of the first quarter of 2022, 80 of the hedge funds that are tracked by the database of Insider Monkey held stakes worth $11 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 91 funds with $12 billion in holdings in Q4 2021.
Here is what Grantham Mayo Van Otterloo & Co. LLC had to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla, Inc. (NASDAQ:TSLA). At its Battery Day last year, Tesla, Inc. (NASDAQ:TSLA) projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
You can also take a peek at 10 Best Stocks for Animal Lovers and 10 Best Nickel Stocks to Buy Now.
