Although the once white-hot returns of investing guru Cathie Wood’s Ark Investment exchange-traded funds have cooled off considerably in 2021 as the market rotated into more consumer-oriented stocks, she remains a fairly astute and sharp fund manager.
Her eight ARK Invest funds hold stakes in dozens of companies totaling more than $40 billion, and Wood isn’t afraid to bet big on specific stocks either. In just her ARK Innovation exchange traded fund (ETF), Wood holds shares in five stocks that are worth over $1 billion each.
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That’s why it’s still worth investors’ time to watch which stocks she’s adding to her portfolios, and the three stocks she has bet biggest on are companies you just might want to follow her lead on right now because they’re primed to deliver superior returns.
Square (Wood’s portfolio value: $2.5 billion)
Fintech stock leader Square ( SQ -2.13% ) made its mark on the world by giving small businesses the tools to compete on more of an equal footing with their mid- and large-cap brethren. Its point-of-sale solutions, analytics, loans, and software allowed them to process payments just as efficiently as bigger businesses.
Yet now larger merchants are finding value in Square’s ecosystem as well. At the end of the third quarter, seller gross payment volume (GPV), or the total dollar amount of all card payments processed by sellers using Square, totaled $41.7 billion, of which mid-market sellers accounted for 37%. That’s up from 28% just two years ago.
Since merchant fees drive this operating segment, bigger businesses should yield juicier gross profits.
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What really has everyone’s interest, though, is Cash App, Square’s fast-growing peer-to-peer digital payments system. As of the end of last year, monthly active users had more than quintupled from three years ago. It generated $2.4 billion of revenue in the third quarter, up 16% from last year, and delivered $512 million in gross profit, a 33% improvement.
Arguably more important was Square’s launch of Cash App Pay, a mobile-friendly payment system that allows users to pay at sellers affiliated with Square by scanning a QR code online or in person. It brings the Cash App experience to payments, and further ties its sellers to its ecosystem.
And now it’s acquiring Afterpay ( AFTP.Y -2.17% ), a global “buy now, pay later” platform, which is the lure retailers are using to entice consumers to shop more. It should also ramp up Square’s own growth.
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Teladoc (Wood’s portfolio value: $2.7 billion)
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Source: https://www.fool.com/investing/2021/12/01/3-cathie-wood-investments-that-could-deliver-super/