Market volatility might unsettle some growth investors, but Ark Invest’s Cathie Wood is thriving in it. As the firm’s Co-founder, CEO, and CIO, she is actively leveraging recent market fluctuations to reshape her portfolio of actively managed growth-focused Exchange-Traded Funds (ETFs), and her performance this year has easily outpaced the broader market. As trading began for the new week, Ark Invest appeared busier than usual, with Wood increasing holdings in Klarna, Qualcomm (QCOM), and Intuitive Surgical (ISRG) on Monday, further solidifying her investment positions.
Cathie Wood is not one to shy away from new listings, having successfully participated in Klarna’s Initial Public Offering (IPO). This tech leader in the “Buy Now, Pay Later” space is far from an ordinary player in a competitive market. Its core strength lies in a sophisticated suite of evolving AI tools designed to forge stronger and lower-cost connections between merchants and shoppers. For many younger consumers reluctant to engage with traditional banks or high-interest credit cards, Klarna’s interest-free installment payment service perfectly fills a market gap. Although its stock price experienced volatility post-listing and currently sits slightly below the $40 IPO price – technically making it a ‘broken’ IPO – Wood likely sees this as a cautionary tale and an opportunity where long-term bullish prospects outweigh short-term noise. Klarna’s business had already begun recovering before going public, with Q2 revenue growing 21%, marking its strongest quarterly growth in over a year. Its brand recognition has been boosted by the IPO, suggesting promising future growth potential.
Another stock that appears overlooked by the market is Qualcomm. This company, with its rich portfolio of patents, focuses on designing and supplying chips and software for mobile devices, wireless networks, laptops, and more. Although its stock price has dipped slightly by 2% over the past year, significantly underperforming many rising tech stocks, the company’s growth prospects haven’t vanished. After a brief setback in fiscal 2023, Qualcomm’s business has accelerated for two consecutive fiscal years, with revenue growing at a double-digit pace for the past five quarters. The company is rightly pushing for business diversification, striving to reduce its heavy reliance on the smartphone sector. In its latest quarterly report, the combined automotive and Internet of Things (IoT) businesses grew by 23%. Simultaneously, Qualcomm continues to return value to shareholders through share buybacks and dividends, with its 2.1% dividend yield being quite attractive.
Intuitive Surgical is another stock with a relatively flat performance this year, seeing a 12% decline in its share price. For investors in this pioneer of robotic surgical arms, it has undoubtedly been a challenging period. The company’s da Vinci Surgical System, which assists surgeries through more precise incisions and more efficient patient recovery times, maintains robust fundamental performance. The company’s revenue growth accelerated for the third consecutive year, with the latest quarter’s revenue rising 21%, driven by a 17% increase in procedures performed using its flagship systems. Despite the stock price decline and solid growth, Intuitive Surgical’s P/E ratio remains above 60. However, in the eyes of Cathie Wood and her firm’s other investors, this still represents a historic bargain compared to its long-term potential.
