A number of Cathie Wood’s favorite stocks started the holiday shortened trading week by increasing significantly. Is her approach to growth investing becoming more popular? There’s no doubting that ARK Invest’s main stock picker has had a bad year following an incredible 2020. You’ll want to pay attention if sentiment shifts in her favor.
Roku (ROKU 5.60%) and Deere (DE 5.13%) are two of the ARK Invest family of exchange-traded funds’ stocks that have performed well recently. Let’s look at why these two choices might provide you greater returns.
Roku is well aware that we’re watching a lot of television these days, and no one knows this better than them. Roku has a staggering 61.3 million accounts at the end of March, and they’re not all dormant homes. Roku users are viewing 3.8 hours of content each day on average. Roku, as the leading operating system for smart TVs, is taking advantage of its position by commercializing its free platform…. Average revenue per user increased 34% over the last year as advertisers have payed up to reach Roku’s engaged viewers.
Roku’s shares have tumbled by almost 82 percent since their peak last year, but it is possible that the decline will bottom out. The first bearish thesis, which predicted that we would be streaming less as the gravest pandemic threat fades away, hasn’t come to pass. Roku has seen an increase of 14% in streaming hours over the past year. A recession may result in advertisers scaling back their spending, according to the new fear; however this may not materialize. Traditional advertising may take a hit, but there are now several premium streaming applications that will pay to be featured on the country’s top streaming platform. Roku should be able to hold up just fine.
Wood is a disruptor in her own way, but she will not avoid a 180-year-old business that has been a leader in commercial, agricultural, and construction equipment since long before most of us have been alive. Construction-site-clearing backhoes and farm tractors may not appear to be cutting edge, but Deere believes itself to be the technology, automation, and even AI leader.
Deere remains one of the most consistent names in farming, and its success has been long-lasting. The firm’s revenue rose 24% in FY 2021, albeit from dismal single-digit top line growth the previous year. Analysts still anticipate Deere’s top line to grow 18% this year and 11 percent in FY 2023. This stock is currently trading at just 12 times next year’s expected earnings. There is also a 1.6 percent yield, which makes this one of Wood’s few stocks that give a quarterly dividend.
For the next several years, infrastructure will remain a worldwide subject. The economy may slow down the construction and rebuilding industry, but Deere is in the correct spot as it waits for the appropriate moment.