3 Cathie Wood Stocks to Own for The Long Run
Cathie Wood pioneered an investing philosophy known as investing in “disruptive innovation.” She was one of the most successful money managers of 2020 and 2021. However, many of her stocks have tumbled now that we are entering a rising interest rate environment. Despite that, there are three few Cathie Wood stocks that are worth owning for the long term. If anything, the current economic environment could represent an incredible buying opportunity.
Who is Cathie Wood?
Cathie Wood is the CEO of ARK Invest. Ark Invest is a fund that invests mainly in disruptive innovation. For instance, this includes anything people consider “cutting-edge technology” like fintech, cryptocurrency, space exploration, 3D printing, autonomous technology, robots and more.
In her own words, Cathie Wood started Ark for two reasons, “First, to focus solely on disruptive innovation, primarily in the public equity markets. Second, to open up research, becoming a ‘sharing economy’ company in the asset management space.”
The ARK Innovation ETF (NYSE: ARKK) made headlines for its stellar performance during 2020. In 2020, the fund rose by approximately 200% and it felt like Cathie Wood was invincible. However, the ARK Innovation ETF is down almost 70% from its all-time high. This fall has wiped out most of its 2020 gains and it is now close to even since then.
With that in mind, let’s examine three Cathie Wood stocks to buy for the long run.
Note: The fund currently has 36 stocks in total.
The 3 Best Cathie Wood Stocks
No. 3 Shopify (NYSE: SHOP)
Shopify is an example of a great company that quickly got overvalued. If you’re not familiar, Shopify is a website builder that makes it incredibly easy to build an online store. There is one main reason that Shopify is worth holding for the long run: we are currently in an entrepreneurship boom.
The New York Times states that “we are witnessing “a tidal wave of entrepreneurial activity.” In 2020, Americas filed paperwork to start 4.3 million new businesses. This is by far the most in the past decade. In the wake of the pandemic, it’s easy to see why people are turning to entrepreneurship.
For the most part, owning your own business is:
- Easier than ever: Tools like Shopify *cough cough* and other digital tools make it incredibly easy to build your own online business. Shopify requires no coding knowledge. Additionally, social media allows you to market your business for free.
- Lucrative: Owning your own business can make you way more money than a job ever could. On top of that, business owners have more control over their destiny. They don’t need to worry about being furloughed if the pandemic makes a resurgence.
- Purpose-driven: People usually start businesses that are aligned with their personal values. For example, a climate activist might start a company that makes clothes from recycled plastics.
Shopify is one of the top tools to help these entrepreneurs achieve their dreams.
Despite its massive correction, Shopify still has a strong business. In 2021, it reported annual revenue of $4.61 billion and a net income of $2.91 billion. These numbers were up 57% and 812% year-over-year (YOY). Not bad for a stock that’s down 75% from its all-time high.
Keep reading for more on Cathie Wood stocks.
No. 2 Coinbase (Nasdaq: COIN)
Coinbase has perhaps the greatest growth prospects of any company in the world. It is one of the only public companies that operate in the cryptocurrency space. Its business is also growing exponentially year over year. Look at these annual revenue numbers:
- 2019: $522.8 million
- 2020: $1.27 billion (+143% YOY)
- 2021: $7.84 (+514% YOY)
And the thing is, even though cryptocurrency seems mainstream, it’s really not. Exploding Topics estimates that only about 22% of the United States population own Bitcoin. For smaller cryptocurrencies, this percentage is likely much smaller.
It also feels like there is good news for the cryptocurrency industry almost every day. For example:
- El Salvador accepting Bitcoin as legal tender.
- Blackrock, the world’s biggest money manager, examining offering crypto services.
- Multiple U.S. politicians buying cryptocurrency.
- Fidelity offering Bitcoin in retirement accounts.
- Ukraine raising money via cryptocurrency.
Sure, there is always a risk that a government will pass new regulations for the cryptocurrency industry. But honestly, this threat is growing smaller each day. Even if regulations are passed, the crypto industry can just sidestep them to adapt and keep growing. On a similar note, the government has been trying to regulate Big Tech for years and no real meaningful progress has ever been made.
Since cryptocurrency isn’t slowing anytime soon, neither should Coinbase’s stock. This is what makes Coinbase one of the top Cathie Wood stocks to own for the long run.
No. 1 Tesla (Nasdaq: TSLA)
Out of all the Cathie Wood stocks, Tesla is her favorite. I say this because it makes up 9% of her portfolio. This makes it her biggest holding just ahead of Zoom, Teladoc and Roku.
Tesla recently shocked naysayers by stringing together multiple profitable quarters. In 2021, Tesla reported FY annual revenue of $18.76 billion and a net income of $3.32 billion. These numbers were up 80% and 657% respectively YOY. In addition, Tesla currently has a stranglehold on the EV industry.
Tesla is also in a great position to profit off the growing need for energy independence in the United States. The COVID-19 pandemic and Russia and Ukraine conflict have shown that globalization is declining. Moving forward, the United States cannot rely on other countries for energy. For this reason, there will likely be a big push toward electric vehicles.
Last, Tesla is one of the top Cathie Wood stocks to hold for the long run because of Elon Musk. Say what you want about Tesla CEO Elon Musk. But, he’s one of the most successful entrepreneurs of our time. As long as he doesn’t get too distracted now that he’s also running Twitter, Tesla will be in good hands.
I hope that you’ve found this article on Cathie Wood stocks to be valuable! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.