Wall Street Favorites: 3 Cathie Wood Stocks With Strong Buy Ratings for April 2024

Stocks to buy

Known for her focus on innovative disruption, Cathie Wood has become one of the biggest names in capital management. With her firm, ARK Invest, Wood has created custom exchange-traded funds focused on aggregating high-potential stocks. Much of her portfolio focuses on technologies like genomics, artificial intelligence, robotics, clean energy and blockchain technology.

This makes for an ETF group that boasts some serious growth over the last ten years of Wood’s fund management. However, these stocks are not without their risks. Disruptive companies tend to command a high share price due to the level of impact they presently drive. That performance may not always last long enough to keep growth steady, but it can help inform future investing decisions.

For investors and analysts alike, taking a close look at Cathie Wood’s stocks could be a good way to assess return potential. As such, here are three of the stocks that make up the Ark Invest portfolio and my thoughts on why Wood picked them.

Nextdoor (KIND)

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Unlike traditional social media platforms, Nextdoor (NASDAQ:KIND) serves a hyperlocal niche for small community communication. This simplification of social media intends to expand its share in a market dominated by tech giants through this niche. By offering users specialized tools like address verification and private messaging, Nextdoor attempts to subvert many of the issues that plague public apps.

Currently, Nextdoor represents one of Ark’s smallest holdings, comprising only 0.16% of the portfolio. Because of this small weight, it’s not likely that Ark expects this stock to be a major driver of long-term wealth. Rather, it potentially sees the company as a low-risk holding due to its price.

For investors, Nextdoor is currently trading at a significant discount, less than a fourth of its peak price in 2021. With the company’s stated goal of returning to growth in 2024, a short-term boom could be on the horizon, making this stock a strong buy candidate.

Recursion Pharmaceuticals (RXRX)

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One of the more substantial Cathie Wood stocks in her portfolio, Recursion Pharmaceuticals (NASDAQ:RXRX) aims to transform clinical-stage biotechnology. The company’s goal to accelerate drug discovery through artificial intelligence applications has earned it a buy rating among analysts. For the Ark portfolio, this stock sits at the middle of the pack, with around 1.74% weighting.

As an early-stage pharmaceutical company, Recursion Pharmaceuticals does not have a proven track record of drugs on the market to stand on. It does, however, possess a proprietary software platform specialized in automating the wet lab experimentation and data collection process. This has allowed it to amass one of the world’s largest biological and chemical datasets for research extrapolation.

By applying supercomputing technology alongside custom-trained AI, RXRX aims to revolutionize the overall drug research and production process. It’s no wonder, then, considering Wood’s affinity for disruptive technologies, that this stock makes her buy list.

Coinbase (COIN)

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The second-largest cryptocurrency exchange and the largest percentage across Ark’s six ETFs, Coinbase (NASDAQ:COIN) is back in the spotlight. At 7.8% of the firm’s total investment holdings, Coinbase appears to be a darling of Cathie Wood’s management strategy. The ethos of Coinbase, as an alternative, U.S.-based crypto exchange likely sits well with Wood’s preference for disruption.

But there’s another reason why Coinbase has climbed to the top of Ark Invest’s combined portfolio: crypto’s resurgence. After FTX damaged public opinion on crypto, a new wave of interest in Bitcoin has revived Coinbase’s prospects. While cryptos across the board have provided stellar returns recently, it’s Coinbase’s position that has benefitted the most.

As a result, the exchange captured $273 million in net income in Q4 of 2023, due to the revival of hype around Bitcoin in October of 2023. Ultimately, due to Coinbase’s reliability and transparency as an exchange, it’s the prime choice for any investor who believes crypto is the future of currency.

On the date of publication, Viktor Zarev 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.

Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.

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