Last week was pretty ho-hum if you zoom out. The major market averages were essentially flat. Zoom in, and you get wild volatility. Last week contained the largest single-day drop — and single-day rise — of the year. This is the kind of uptick in volatility that makes Ark Invest co-founder, CEO, and chief investment officer Cathie Wood more pecking than usual.
Wood was actively buying and selling stocks last week. She added to her existing positions in Amazon.com (NASDAQ: AMZN), Roku (NASDAQ: ROKU), and Guardant Health (NASDAQ: GH) on Friday. Let’s take a closer look.
1. Amazon
The leading online retailer was the belle of the buying ball on Friday. Wood raised her stake in Amazon in five of the six Ark Invest growth stock exchange-traded funds (ETFs). The stock has fallen nearly 10% since posting disappointing second-quarter results earlier this month.
Amazon did get better during the last six trading days since the uninspiring financial update. It announced late last week that it was teaming up with TikTok to make it easier for influencers on the short-form video platform to make some money by promoting products sold on Amazon. The partnership will allow TikTok’s massive audience to buy promoted Amazon products without leaving the video app.
It’s fair to say that Amazon’s latest quarter wasn’t great. Revenue rose a weaker-than-expected 10% in the second quarter, and its guidance calling for an 8% to 11% increase is more of the same. It was a different story at the other end of the income statement, with earnings per share more than doubling to land ahead of Wall Street profit targets. However, Amazon’s slowest year-over-year top-line growth in more than a year is not a good look for a stock that hit an all-time high earlier this summer.
This is also more than just an e-commerce company. Its huge Amazon Web Services (AWS) cloud-hosting platform accounted for 89% of the operating profit in its latest quarter. That’s some lush greenery. Picking up shares at a nearly 10% discount to where they were six trading days ago — and 17% off the all-time high it scored just last month — doesn’t seem like a bad idea for long-term believers in Amazon’s reign and forest.
2. Roku
Roku is another stock trading lower after announcing fresh financials earlier this month, but this markdown seems even more unfair. The TV streaming pioneer exceeded expectations on all fronts with its second-quarter report. It was a “beat and raise” performance, as guidance also surpassed analyst forecasts.
The platform’s popularity continues to grow, and not just because it has now posted double-digit revenue growth for five consecutive quarters. Roku is reaching 83.6 million streaming households, an increase of 14% over the past year. The number of hours streamed on the platform surged 20%. So, once again, we see engagement on the rise as usage is outpacing Roku’s audience growth.
Roku’s still in the red on a reported basis, but the losses are narrowing. Trailing free cash flow is in the nine figures, so it’s not as if the company isn’t a money maker. Its namesake Roku Channel has been particularly resilient, with streaming on that free ad-supported channel soaring 75% over the past year.
3. Guardant Health
Shares of Guardant Health declined 4% on Friday, making it the worst performer of these three Wood purchases on the day. There wasn’t bad news put out on the developer of oncological tests. It actually posted blowout financial results earlier in the week. It exceeded top- and bottom-line expectations in its latest quarter, boosting its full-year revenue guidance in the process.
Guardant has a limited number of products currently available for clinical or biopharmaceutical tests, but its pipeline is growing more attractive. It has a colorectal cancer screening tool — Shield — that is getting close to clearing the U.S. Food and Drug Administration (FDA) regulatory hurdle for approval. It would join Guardant360 — a portfolio of liquid and tissue precision oncology tests — in the market, ramping up its growth potential.
Guardant doesn’t expect to be profitable until 2028, but patience could pay off for long-term investors. Guardant also sees its revenue more than tripling to $2 billion by then. Sometimes, the best growth stories take time to play out.
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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 positions in Roku. The Motley Fool has positions in and recommends Amazon, Guardant Health, and Roku. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
