3 Stocks That Cathie Wood Is Loving Now: February 2024

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Cathie Wood stocks make headlines for their potential to be at the leading edge of disruptive technologies and generate high returns. Yet, Wood’s flagship ARK Innovation ETF (NYSEARCA:ARKK) has declined 8% year-to-date (YTD). On the other hand, the S&P 500 and Nasdaq 100 have gained 3.9% and 4.6%, respectively. Now, several of her portfolio companies present potentially appealing entry points for buy-and-hold investors, given their more attractive valuations.

In her search for bargains, Wood recently added to some of her holdings. Despite short-term challenges, the following three Cathie Wood stocks likely offer solid long-term investment opportunities.

Tesla (TSLA)

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The widely followed fund manager maintains her optimistic outlook on Tesla (NASDAQ:TSLA), despite the recent TSLA stock price decline. This conviction mainly stems from two key factors: the anticipated acceleration of global electric vehicle (EV) adoption and Tesla’s burgeoning artificial intelligence (AI) capabilities. 

Yet, Tesla’s Q4 2023 results fell short of expectations, cautioning for lower vehicle volume growth in 2024. Revenue increased 3% year-over-year (YOY) to $25.17 billion. Non-GAAP net income came in at $2.49 billion, or 71 cents in earnings per share (EPS).

Nonetheless, Cathie Wood still emphasizes the broader narrative of global EV market expansion. She contends that temporary production hurdles and volume growth declines represent a cyclical trough rather than a fundamental shift in the company’s trajectory.

Currently, Tesla is focusing on cost reduction with an aim to improve competitiveness against rising Chinese EV players. According to Wood, this approach could pave the way for future margin improvement and accelerated growth if Tesla’s autonomous taxi networks materialize. This could potentially happen within the next two years.

TSLA stock has plunged 25% YTD, while shares are trading at a valuation of 57.5 times forward earnings and 6.8 times trailing sales. The 12-month median price forecast for TSLA shares is at $223, suggesting potential 20% upside from current levels.

CRISPR Therapeutics (CRSP)

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Switzerland-based CRISPR Therapeutics (NASDAQ:CRSP) stands as a potentially compelling opportunity among Cathie Wood stocks. Investors are excited that its technology to alter DNA sequences could lead to therapeutic advancements.

Management announced Q3 2023 results in November. Net loss stood at $112 million, compared to a net loss of $174.5 million in the prior-year quarter. Cash and equivalents ended the period at a robust $1.74 billion.

CRISPR recently achieved the first FDA approval for its gene-editing therapy, Casgevy, in treating sickle cell disease (SCD) and beta thalassemia. This milestone could potentially unlock a multi-billion dollar revenue stream for the company. With roughly 100,000 patients suffering with SCD in the U.S. alone, the total addressable market for Casgevy is estimated at $70 billion. 

However, the initial market reaction was a sell-off in CRSP stock December. Some analysts expressed skepticism around widespread adoption, primarily due to the anticipated high cost of treatment. But shares have since recovered significantly, reflecting long-term investor confidence in this revolutionary therapy.

CRISPR stock has returned around 15% YTD and is trading at 35.5 times sales. The average analyst price target for CRSP shares is $79.

Unity Software (U)

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Investors in Unity Software (NYSE:U), the video game software developer with a platform to monetize interactive content, have been navigating a complex set of developments. One key challenge was the fallout from new strict rules on video games in China. 

Operational challenges in 2023 forced Unity management to implement a revised pricing model. But not all developers on the platform were happy. Nonetheless, Cathie Wood’s substantial purchase in Unity stock shows her confidence in the metaverse and virtual reality (VR) space. Such a growth in immersive experiences could further the demand for gaming platforms.

Unity stock has declined 19% YTD, and shares are trading at 6.3 times trailing sales. The 12-month median price forecast for U shares is at $36 , signaling roughly 10% upside.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.