Cathie Wood’s ARK Fund Has 40% of the Portfolio in 5 Sizzling ‘Strong Buy’ Stocks

What a difference a year makes. After exploding higher from March 2020, right at the beginning of the COVID-19 pandemic, until February 2021 (when the ARK Innovation fund printed an all-time high), Cathie Wood’s exchange-traded fund soared a stunning 313% and attracted billions of dollars of new capital. Wood was hailed as a genius as she took big positions in companies that had very promising potential. Yet, after the parabolic run, trouble started brewing. In 16 short months, between February 2021 and June 2022, all the huge gains were given back, and the fast money was seemingly out the door when the fund finally bottomed in December 2022.

Wood, whose mentor Art Laffer worked in the Reagan administration and was her professor at the University of Southern California, has said she stuck to her guns and her strategy of having a horizon of “forever,” and things are starting to look bright again for investors. While always a vehicle for the aggressive growth crowd and not really intended for conservative investors, since hitting the low in late 2022, the fund took off with the 2023 artificial intelligence tech rally and is up a stunning 54% from the lows.

Not unlike Warren Buffett, Wood’s ARK Innovation fund has a concentrated portfolio, with 9.2 billion in assets with only 31 holdings. The top five stocks make up 40% of the fund. We screened those top stocks, all of which are highly regarded on Wall Street and rated Buy, and they make sense for investors via the fund or individually.

While all five of the following stocks are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Tesla

The electric vehicle giant led by Elon Musk continues to be by far the biggest position in the ARK Innovation fund. Tesla Inc. (NASDAQ: TSLA) designs, develops, manufactures, leases and sells electric vehicles and energy generation and storage systems in the United States, China and elsewhere.

Its Automotive segment offers electric vehicles, as well as sells automotive regulatory credits. It offers non-warranty after-sales vehicles, used vehicles, retail merchandise and vehicle insurance services. This segment also provides sedans and sport utility vehicles through direct and used vehicle sales, a network of Tesla Superchargers, and in-app upgrades; purchase financing and leasing services; services for electric vehicles through its company-owned service locations and Tesla mobile service technicians; and vehicle limited warranties and extended service plans.

The Energy Generation and Storage segment engages in the design, manufacture, installation, sale and leasing of solar energy generation and energy storage products and related services to residential, commercial and industrial customers and utilities through its website, stores and galleries, as well as through a network of channel partners. It offers provision of service and repairs to its energy product customers, including under warranty, as well as various financing options to its solar customers.

Wedbush’s $350 target price on Tesla stock is a Wall Street high. The consensus target of $230.18 is below Friday’s closing share price of $260.02.

Coinbase

This pure play on cryptocurrency is the fund’s second-largest holding and likely will be another long-term hold. Coinbase Global Inc. (NASDAQ: COIN) provides financial infrastructure and technology for the crypto economy globally.