Cathie Wood started the new trading week with the aim of causing a stir. The co-founder and CEO of Ark Invest has increased 11 of her existing positions. She’s had a rough start to 2024, but anyone who saw her breakout 2020 knows that you can never count Wood out.
Wood bought shares of Palantir Technologies (NYSE:PLTR), Metaplatforms (NASDAQ:META)And Qualcomm (NASDAQ:QCOM) on Monday and added some of their largest positions. Let’s take a closer look at these three purchases.
1. Palantir
One of last year’s hottest stocks got off to a strong start in the first two months of 2024. Palantir posted a near quadruple hit in those 14 months, a fortune-changing 291% gain. With shares of the intelligence software developer falling for the second month in a row, Wood is a buyer.
She’s not the only one who sees this as a potential buying opportunity. The once bearish Monness Crespi upgraded Palantir on Friday, raising its rating to “Neutral” from “Sell.” With Palantir just a week away from reporting first-quarter earnings, the timing of the upgrade is notable. The company’s execution of government contracts remains patchy and the stock isn’t cheap. But with shares declining in recent weeks, Monness Crespi isn’t comfortable going into Palantir’s upcoming financial update with a pessimistic valuation.
Expectations for Palantir are high. Analysts expect revenue to rise 19% to $625.3 million in next week’s first-quarter report. They also expect Palantir’s earnings per share to rise 60% to $0.08. Those are ambitious goals, but the reality has more than lived up to the task, with Palantir posting double-digit percentage increases in profit in three of the last four quarters.
Despite recent bearish trends, momentum is on Palantir’s side. After three years of slowing sales growth, Wall Street experts expect sales to accelerate in 2024. Why? In part because Palantir is gaining traction with private companies for its big data analytics after a long history of serving the U.S. military and Western allies. U.S. commercial sales rose 36% last year, more than double Palantir’s overall growth in 2023. That’s just a fifth of Palantir’s revenue mix, but it’s a segment that’s at the heart of rising sales in 2024 Sales could be.
2. Metaplatforms
Meta is another stock that nearly tripled in 2023, roughly quadrupling in the 14 months ended February before slipping in March and April. The parent company of Facebook, Instagram and WhatsApp saw shares fall 15% after reporting mixed financial results last week.
The first quarter itself was solid. Sales growth accelerated 27% in the first three months of the year, compared to a 22% increase in the fourth quarter last year. Earnings also exceeded analysts’ profit targets. It was Meta’s uninspiring leadership that killed the bullish narrative.
The sell-off appears to be an alarm signal. Meta remains a master at monetizing social media platforms, and if rival TikTok is banned in the US, it will only drive that app’s young user base into one of Meta’s digital dive bars. The stock is also cheaper than you might think, considering the stock is up 269% in the last 16 months. Meta trades for 23 times this year’s forecast earnings and 20 times next year’s market forecast. Put another way, you could have bought Meta early last year for just six times what it is expected to earn in 2024.
3. Qualcomm
Qualcomm is not like Palantir and Meta. The patent-rich developer and provider of chips and software for mobile devices, wireless networks, laptops and other devices saw its shares come close to tripling or even doubling last year. The company has struggled with growth recently, although its shares have traded significantly higher since late February. And unlike Palantir and Meta, which are among Ark Invest’s 18 largest collective holdings, Wood has a much smaller stake in Qualcomm.
Fiscal second quarter results will also be announced later this week. Investors don’t wait long for it. The consensus estimate is for a 6% decline in revenue and stagnant profit growth. Qualcomm has delivered three-quarters of accelerating earnings growth and a projected earnings multiple in the high teens, and is on the verge of regaining the all-time highs it reached two years ago. A surprisingly strong report from Thursday afternoon may help make that happen.
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, 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 Meta Platforms, Palantir Technologies, and Qualcomm. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool