In this article, we discuss the 14 best ARK stocks to buy now. If you want to skip the detailed analysis of ARK Investment Management and its hedge fund performance, skip directly to the 5 Best ARK Stocks To Buy Now.
ARK Investment Management is one of the most renowned investment management firms in the U.S. The fund is owned and run by American investor Catherine Duddy Wood, better known as Cathie Wood. The firm was previously headquartered in New York but moved to Florida in 2021.
ARK Investment Management’s main area of focus is disruptive technology. The firm’s flagship ARK Innovation ETF (NYSE:ARKK) had an annual average return of 39% between 2014 and 2021. However, the fund has been falling consistently since its February 2021 highs.
As of December 15, ARK Investment Management’s flagship ETF has declined by over 66% year to date. However, the ETF has seen $1 billion worth of inflows year to date. In an interview with Bloomberg, Cathie Wood defended her fund saying that the inflows are due to the investors’ trust in the strong research done by her team and that things will be different in five years. She added that especially young people realize that her firm is investing in the future, rather than the past. She further said that the future is extremely bright for the firm.
In the third quarter of 2022, ARK Investment Management’s 13F portfolio was valued at $14.347 billion, down from $16.91 billion in the previous quarter. The fund made 12 new stock purchases in the quarter and sold out 112 stocks. Some of the best ARK stocks include Tesla, Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Roku, Inc. (NASDAQ:ROKU).
Cathie Wood of ARK Investment Management
Our Methodology
After going through ARK Investment Management’s 13F portfolio in the third quarter of 2022, we chose the 14 stocks with the highest concentration in the firm’s portfolio.
Best ARK Stocks To Buy Now
14. Unity Software Inc. (NYSE:U)
Value of ARK Investment Management’s 13F Position: $358.844 million
Number of Hedge Fund Holders: 34
Unity Software Inc. (NYSE:U) is a software development company and it is mainly known for its game engine, Unity. Unity is used to develop video games and a few other applications.
In the last three months, 13 analysts have covered Unity Software Inc. (NYSE:U) with 8 Buy ratings and 5 Hold ratings. Their average price target of $39.29 still provides a significant upside from the stock price of $33.63 at the market closing time on December 14.
ARK Investment Management was the most prominent stakeholder of Unity Software Inc. (NYSE:U) in the third quarter of 2022. The firm owned over 11.26 million company shares worth $358.844 million, representing 2.5% of the fund’s portfolio. In Q3, 34 hedge funds held Unity Software Inc. (NYSE:U)’s shares.
Tesla, Inc. (NASDAQ:TSLA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Roku, Inc. (NASDAQ:ROKU) are some of the best ARK stocks along with Unity Software Inc. (NYSE:U).
Here is what ClearBridge Investments had to say about Unity Software Inc. (NYSE:U) in its Q1 2022 investor letter:
“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still underpenetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.”
13. Shopify Inc. (NYSE:SHOP)
Value of ARK Investment Management’s 13F Position: $391.506 million
Number of Hedge Fund Holders: 34
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company that operates in around 175 countries. ARK Investment Management increased its holdings in the company by 1098% in the third quarter to 14.5 million shares, valued at $391.506 million. The company covered 2.72% of the firm’s portfolio.
Shopify Inc. (NYSE:SHOP) announced record sales for Black Friday and Cyber Monday week at the end of November. The sales were up 19% to $7.5 billion, compared to the same period in 2021. The peak sales volume was $3.5 million in sales per minute on November 25. London, Los Angeles, and New York-based customers were responsible for most of the sales during the week.
On December 8, SMBC Nikko analyst Andrew Bauch maintained an Outperform rating on Shopify Inc. (NYSE:SHOP)’s shares and raised his price target to $45 from $40. He believes that out of the companies that fall on his coverage list, Shopify Inc. (NYSE:SHOP) is one of the companies that might accelerate sales growth and increase its margins in 2023.
Artisan Partners made the following comment about Shopify Inc. (NYSE:SHOP) in its Q3 2022 investor letter:
“Shopify Inc. (NYSE:SHOP) is a leading e-commerce platform supporting over 2 million merchants with software, online storefronts and payments technology. Like Uber, Shopify returned to mid-cap territory during Q2 as the company’s profit cycle and share price have faced significant pressure. Earlier this year, the company began a phase of investments to support a range of future growth drivers, including Shopify Plus for larger brands, logistics services, international expansion, point-of-sale payments and social media-based commerce. With high inflation putting pressure on consumer spending, and with e-commerce activity normalizing after a massive pandemic spike, Shopify’s earnings have fallen sharply. While we have outstanding questions about the likelihood of success for the company’s capital-intensive logistics investments, we decided to take advantage of the stock’s 75% YTD decline and initiate a GardenSM position at a deep discount to our PMV estimate. Our thesis is predicated on our belief there is still a long runway for commerce to move online, and Shopify is well-positioned to win share of this market. The company has created an ecosystem of products (payment processing, financing, shipping, customer engagement tools, etc.), partners (TikTok, Google, Meta), sales channels and over 6,000 apps to help its merchants sell online and establish direct relationships with customers.”
12. Beam Therapeutics Inc. (NASDAQ:BEAM)
Value of ARK Investment Management’s 13F Position: $404.508 million
Number of Hedge Fund Holders: 27
Beam Therapeutics Inc. (NASDAQ:BEAM) is an American biotechnology company headquartered in Massachusetts. It takes the 12th position in our list of best ARK stocks. Since the beginning of the year, the company is working on a four-year collaboration with Pfizer Inc. (NYSE:PFE) focusing on in vivo base editing programs for rare genetic diseases of the liver, muscles, and central nervous system.
Out of 920 hedge funds tracked by Insider Monkey, 27 were bullish on Beam Therapeutics Inc. (NASDAQ:BEAM) in the third quarter, up from 17 in the previous quarter. ARK Investment Management held 8.49 million company shares in the quarter at a combined value of $404.508 million, making it the hedge fund with the largest stake in Beam Therapeutics Inc. (NASDAQ:BEAM).
In Q3, Beam Therapeutics Inc. (NASDAQ:BEAM) reported a GAAP net loss of $1.56 per share, missing the consensus by $0.26. However, the company’s revenue increased by a massive 1977.6% year-over-year to $15.79 million, outperforming the estimates by $8.64 million. The company exited the quarter with $1.1 billion of cash, cash equivalents, and marketable securities.
11. Twilio Inc. (NYSE:TWLO)
Value of ARK Investment Management’s 13F Position: $471.993 million
Number of Hedge Fund Holders: 58
Twilio Inc. (NYSE:TWLO) is a communications company based in California. The company offers communication tools such as voice messages, phone calls, and SMS, and also operates call centers.
Twilio Inc. (NYSE:TWLO) stock is trading at $48.05, which is near its 52-week low of $41.00. However, Twilio Inc. (NYSE:TWLO) still has a strong balance sheet with $4.21 billion in cash and short-term investments, and the long-term debt of the company is just below $1 billion. This pull-back might provide an attractive entry point for long-term investors.
ARK Investment Management maintained its position as the most prominent shareholder of Twilio Inc. (NYSE:TWLO) for the sixth consecutive quarter at the end of Q3 2022. The firm owned 6.8 million company shares, worth $471.993 million, covering 3.28% of the firm’s portfolio.
Here is what RiverPark Funds specifically said about Twilio Inc. (NYSE:TWLO) in its Q2 2022 investor letter:
“Twilio Inc. (NYSE:TWLO) offers a full suite of cloud-based communications software, services and tools that allows companies in a wide range of businesses to build omni-channel communications capabilities (video, chat, voice, SMS, fax and email) directly into their customer facing applications without needing to build back-end infrastructure and interfaces. The company also provides software tools that allow its users to gather and categorize customer data (its Segments offering) and to create next generation call centers (Flex) to utilize this data in customer interactions. Twilio is the leader in this fast growing $80 billion Communications-Platform-as-a-Service (or CPaaS) market, having grown its customer base 5x in the past five years to 268,000 customers and to a $3.5 billion run rate revenue for…
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