Cathie Wood's aggressive investing style has started to bounce back into favor. She's not going to stand still. The co-founder, CEO, and ace stock picker for Ark Invest keeps making moves for the exchange-traded funds she helps manage. She was busier than usual on Thursday with her daily transaction summary.
The fund manager increased her existing stakes in Amazon (NASDAQ: AMZN), MercadoLibre(NASDAQ: MELI), and CRISPR Technologies (NASDAQ: CRSP) on Thursday. Is Wood back on track after a rough start to 2024?
1. Amazon
Wood often buys when some of her stocks take a step back, but she's also not afraid to buy into strength. Shares of Amazon have risen 13% since the company posted better-than-expected financial results on Halloween. Ark Invest added to its stake on Thursday.
The leading online retailer saw net sales rise 11% in the third quarter, at the top end of its earlier guidance calling for an 8% to 11% year-over-year increase. A 9% gain in stateside sales was enhanced by double-digit growth internationally as well as for its thriving Amazon Web Services (AWS) cloud-hosting business. The real story here is the bottom line where Amazon continues to blow past Wall Street profit targets. Earnings per share rose 52% to $1.43. This is the fourth report in a row that Amazon beat profit expectations by at least 18%.
Image source: Getty Images.
Widening margins can overcome modest top-line gains. In a retail climate of rising costs, the ability to milk more of its sales to the bottom line is resonating with investors. Free cash flow more than doubled for the quarter.
The well-received report comes as a welcome contrast to its poorly received second-quarter results three months earlier. That update featured another bottom-line beat, but the market wasn't pleased with the top-line miss on single-digit e-commerce growth both here and abroad. Amazon's guidance also wasn't particularly appealing.
Amazon's fresh guidance calls for 7% to 11% in net sales growth for the seasonally potent holiday quarter. This is actually lower than the outlook it offered for the third quarter, but investors saw how it was able to nail the top end of that range. The bottom line should continue growing even faster.
2. MercadoLibre
Shares of MercadoLibre tumbled 16% on Thursday after the company posted disappointing financial results. Revenue rose 35% in U.S. dollars, in line with expectations. However, the mere 11% increase on the bottom line was a rare miss for the Latin American e-commerce and fintech giant.
MercadoLibre has been able to use the success of its e-commerce platform to champion adjacent businesses. Some investors can argue that its Mercado Pago fintech solution is the real star here. The stock was trading near September's all-time highs just before the report, but Wood seems to have seen the stock's sell-off as a buying opportunity. MercadoLibre has a history of rewarding investors who buy on dips.
3. CRISPR Therapeutics
Wood is a fan of the potential for gene editing as a way to battle genetic diseases. She added to CRISPR on Thursday, two days after the company posted mixed quarterly results. One of the leading gene-editing stocks, CRISPR is working on clinical trials tackling oncology, autoimmune, diabetes, and cardiovascular solutions.
The fresh financials aren't as important as you might think. Coming up short on the top line but clocking in with a smaller loss than expected isn't a big deal. CRISPR is still early in the long regulatory approval process. It has a cash-rich balance sheet, so time is on its side. A pair of analysts did lower their price targets on the stock. They have neutral ratings on the stock, and they might remain on the sidelines until the path to revenue generation and profitability become clearer. Thankfully, time is on Wood's side, too.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, CRISPR Therapeutics, and MercadoLibre. The Motley Fool has a disclosure policy.
