What is the stock? 

Teladoc (NYSE: TDOC) is a telemedicine and virtual healthcare company, based in the US. Due to the pandemic, demand was able to soar over the past couple of years, and this meant that the Teladoc share price hit highs of around $300 in February 2021, a 150% increase from before the pandemic. But things have been far less pretty in recent months. For example, as the pandemic has subsided, there have been signs of slowing growth. Therefore, the share price has fallen to lows of around $30, a decline of 77% in the past year. 

Recently, the price crashed due to a very disappointing first-quarter trading update. Firstly, the company had to reduce expectations for 2022, and it now expects ‘only’ $2.45bn of revenues for the year. This was reduced from previous expectations of $2.6bn, highlighting the slowing growth of the firm. 

Secondly, in the first quarter, the firm recorded a net loss of $6.67bn, against revenue of just $565m. This was primarily due to a non-cash goodwill impairment charge of $6.6bn, resulting from the firm’s overpayment for its acquisition of Livongo in 2020. Although this has not affected the cash position of the company, it’s still a major negative, showing severe missteps on the part of management. 

Why is Cathie Wood continuing to buy? 

In hindsight, Teladoc has not been one of Cathie Wood’s best purchases. However, as the Teladoc share price has sunk, she has continued to buy. I think there are many signs that the telehealth firm is now too cheap, and the long-term future is still bright. 

Firstly, although growth is expected to be lower than before, Teladoc still expects full-year revenue growth of around 20%. As there are no longer lockdowns within the US, it’s encouraging to see that Teladoc is still growing. This highlights that the firm can perform well post-pandemic. 

Secondly, Teladoc stock has not been this cheap since the start of 2018, a year when the firm only made $418m in revenues. Therefore, it seems that the performance of the share price has been entirely out of touch with the performance of the company. This recent decline also means that Teladoc trades with a price-to-sales ratio of just over 2. For a growth stock, this is incredibly cheap. Indeed, the firm has previously traded at ratios of around 25. 

This means that I’m tempted to follow Cathie Wood and buy some more Teladoc stock. Its long-term potential seems too strong. 

The post A Cathie Wood growth stock I’m buying in a heartbeat appeared first on The Twelfth Magpie.

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Stuart Blair owns shares in Teladoc Health. The Motley Fool UK has recommended Teladoc Health. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

What’s interesting about Roku, to my mind, is that the stock is a key holding for fund manager Cathie Wood, who is seen as one of the world’s top growth/innovation investors. Currently, it’s one of the largest positions in her ARK Innovation ETF.

Should I add this Cathie Wood stock to my portfolio after the recent share price fall? Let’s take a look.

Why Roku’s share price tanked

Looking at Roku’s Q4 results, it’s easy to see why the share price fell.

For starters, Q4 revenue came in at $865.3m (up 33% year on year), well below the consensus forecast of $894m, and also below management’s guidance of $885m to $900m.

Secondly, income from operations for the period was down 67% year on year. Income was impacted significantly by sales and marketing expenses, which jumped 70% year on year.

Third, guidance for Q1 2022 was quite disappointing. This quarter, Roku expects revenue growth of 25% – below the consensus forecast of 30%. The group blamed supply chain disruptions and lower advertising budgets of some negatively affected companies for the deceleration in top-line growth.

2021 highlights

There were plenty of positives in the results, however.

One was that the group added 8.9m active accounts in 2021, and ended the year with over 60m active accounts. And average revenue per user (ARPU) grew to $41.03, up 43% year on year.

Another was that the company was the number one streaming platform in the US, Canada, and Mexico by hours streamed for the year. It’s worth pointing out that the Roku OS also remained the top selling smart TV OS in the US, representing more than one in three smart TVs sold.

Meanwhile, the group had success with its Roku Channel in 2021. Here, streaming hours more than doubled year on year for the full year.

This all suggests that the company is still a major player in the streaming space, and enjoying plenty of success right now.

Can Roku keep growing?

My main concern here though is in relation to the sustainability of the company’s growth levels.

While Roku’s streaming devices added a lot of value for consumers in the past, they could be less relevant in the future. That’s because today, most TVs come equipped with smart functionality. As people continue to upgrade their TV sets to new smart TVs, and buy products from the likes of Samsung, LG, and Sony, Roku’s growth could slow. Roku is addressing this issue by exploring the idea of manufacturing its own TVs. I still see a lot of uncertainty, however, as I don’t see a genuine competitive advantage here.

Another concern for me is the valuation. For 2022, analysts expect Roku to generate earnings per share of $1.63. At the current share price, that puts the stock on a forward-looking price-to-earnings ratio of about 65. That’s quite high. If future growth is disappointing, the stock could continue to underperform.

Roku stock: my move now

Given the risks surrounding the valuation and future growth levels, I’m going to leave this Cathie Wood stock alone for now. To my mind, the risk/reward skew doesn’t look so attractive.

All things considered, I think there are better growth stocks for me to buy today.

The post Cathie Wood stock Roku just crashed. Is it time to buy? appeared first on The Twelfth Magpie.

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Edward Sheldon has no position in any of the shares mentioned. The Motley Fool UK has recommended Roku. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Cathie Wood has been buying the dip

Teladoc is the largest telehealth provider in the world. But after reaching highs of nearly $300 at the start of February this year, it has now dropped back to under $100. This has made Teladoc one of the worst performing tech stocks and it has even dipped below pre-pandemic prices. Nonetheless, as the stock has dipped, Cathie Wood has continued to buy. She currently owns 11% of Teladoc shares.

One reason may be due to optimism that, after rising in popularity during the pandemic, telehealth is set to grow over the next few years. In fact, consultancy firm McKinsey & Company estimates that the US virtual care market could reach $250bn. As Teladoc is the current market leader, this is a very good sign.

Further, it has continued to report decent results. This includes expected full-year revenues of over $2bn, around a 100% rise from last year. In the recent third-quarter results, it also reported over 80% year-on-year revenue growth, despite fears that previous growth had been a one-off due to the pandemic. As such, this demonstrates to me that the recent dip in the share price has been overdone.

What are the risks?

Yet despite the company performing well, there are still some issues. For example, it continues to post large losses, and this year it expects an EBITDA loss of around $17m. With tech stocks, while I don’t mind operating losses, I like to see positive EBITDA as this shows a clear route to net profitability. Therefore, this is a key risk for the shares that must be considered.

Furthermore, there is also the risk of inflation, which is no longer being described as temporary. Inflation is particularly damaging for growth stocks because it lowers the value of future cash flows. This is where these growth stocks obtain a large amount of their valuation. If interest rates rise in the US, which is expected next year, it will also make it more expensive to borrow.

What am I doing about this tech stock?

I already own Teladoc shares, and I’m still optimistic for the long term. Indeed, I feel that the company is sacrificing short-term profitability to capitalise on long-term growth potential in an innovative sector. The company’s extremely large revenue growth offers me hope that this strategy is working. Therefore, despite the risks that face the company, Teladoc looks far too cheap in my opinion. I may buy some more, as I hope for a large rebound next year.

The post A Cathie Wood tech stock I think is severely undervalued appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Stuart Blair owns shares in Teladoc Health. The Motley Fool UK has recommended Teladoc Health. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recently, I’ve been taking a look at the investment case for the popular electric vehicle (EV) stock. Should I buy TSLA for my own portfolio?

Should I buy Tesla shares today?

I can see a number of reasons to invest in Tesla right now. For starters, there’s the growth potential of the EV market. This is set to boom in the years ahead and Tesla, as a market leader, is likely to benefit. In the second quarter of 2021, the group delivered 201,250 EVs, up from 90,650 a year earlier. Clearly, the company’s advancing rapidly, underpinning its status as one of the fastest growing car brands in the world.

Secondly, there’s Tesla’s self-driving car technology. The company’s made great strides in this space in recent years and the technology looks pretty exciting. If Tesla can continue to advance here and achieve full ‘Level 5’ autonomous technology in the near future, its sales could rocket higher. ARK’s Cathie Wood – who is an expert in the disruptive technology space – believes there’s a 50% chance Tesla will achieve fully autonomous driving within five years.

Wood also thinks Tesla shares could hit $3,000 in the not-too-distant future. And she’s been right about the share price before. Back in 2018, Wood predicted Tesla would hit $4,000 ($800 after the recent stock split) within five years, hitting that target two years early.

Risks that could hit Tesla’s share price

However, there are quite a few risks to be aware of here. One is that regulators are targeting the company’s self-driving technology. Currently, Tesla is being investigated by the National Highway Transportation Safety Administration for its autopilot feature.

This investigation could impact the share price if Tesla’s technology is found to be unsafe. Meanwhile, the National Transportation Safety Board believes Tesla’s use of the term ‘Full Self-Driving’ to describe its technology is “misleading and irresponsible” and encourages “abuse of the technology.”

Another risk is Tesla’s valuation, which is very high. Currently, it has a market capitalisation of $744bn. That’s about 14 times the market-cap of Ford (which has recently launched an EV version of its top-selling pickup truck). At present, the average Wall Street price target for the stock is $686. That’s below the current share price.

Going back to Wood, it’s interesting to see that she’s actually been selling some Tesla shares recently, despite her $3,000 price target. Wood likes to trade around Tesla’s volatility, buying when the share price is low and selling when it’s high. This month, ARK has sold around $300m worth of Tesla stock.

TSLA stock: my move now

Weighing every up, I’m going to leave Tesla shares on my watchlist for now. The company certainly looks interesting from an investment point of view. However, I think there are better stocks to buy right now.

The post Should I buy Tesla stock now? appeared first on The Twelfth Magpie.

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Edward Sheldon has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Contrarian thinker

Cathie Wood has shown herself to be unafraid of going against popular investing opinion. In fact, she’s gone on record as saying that the “most exciting times” are when she’s on the receiving end of criticism. Her controversial early investment in US electric vehicle pioneer Tesla is a great example of this. 

As one might have guessed, the fund benefited hugely from this early call when Tesla multi-bagged in value last year. Since then, it’s come off the boil (fuelling further criticism of Wood’s strategy). However, it’s still the top holding in ARK Innovation.

Wood’s conviction is something I’ve tried to apply to my own investing. While I still don’t feel comfortable holding stock in Tesla directly, I do think it’s important to regularly evaluate the consensus view on any stock. In fact, this is essential if I’m to beat the market. I can’t generate better results than the herd if I’m doing exactly the same thing as the herd. Of course, stock-picking also raises the potential for me to underperform as well. 

Embrace disruption

The world is in a constant state of flux. Everything changes and nothing lasts. Rather than fight back against this, Cathie Wood embraces it. Linking in with her purchase of Tesla, she is a huge fan of disruptive companies — those that shake the foundations of an industry and change it for the better. As she puts it: “In a world driven by disruption, be on the right side of change.“

Although I can’t say that all of the stocks I own are disruptive, I do recognise the importance of looking ahead rather than in the rearview mirror. After all, a company’s past performance is no guarantee of future returns. It’s not hard to come up with examples that are now shadows of their former selves. Think mobile phone makers Nokia and Blackberry being impacted by the arrival of Apple.

So, when I’m investing in a specific stock, I regularly ask: “Will this company still be around in 5-10 years and, if so, will it be worth more than it currently is?” If I’m not at least cautiously optimistic, I don’t buy. 

Expect market corrections

Despite being very bullish on technological progress, Wood is experienced enough to know that the fund’s value, and stock markets in general, will never go up in a straight line. In fact, the former is down 10% in the last six months. Regardless of the reason, she knows that downturns are inevitable and, again, embraces them, saying: “Corrections are good, they keep us all humble.” 

Cathie Wood walks the walk too. When Tesla slumped back in February, she bought more of the stock. I’ve tried to do the same with my own investments, particularly during the coronavirus crisis.

This isn’t easy. However, I try to remind myself that, despite being volatile, equities have delivered the best gains of any asset class over the long term. This is the risk/reward trade-off. It’s one I — and clearly Cathie Wood — think is worth signing up for.

The post How I’d invest £5,000 using lessons from Cathie Wood appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Apple and Tesla. The Motley Fool UK has recommended BlackBerry and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recently however, Wood-style stocks have staged a huge comeback. This is illustrated by the fact that since mid-May, Wood’s flagship fund, the ARK Innovation ETF, is up nearly 25%.

I’m not bullish on most of her stocks as many are too speculative for my liking. That said, there are a number of stocks of hers I do like. Here’s a look at two I’d buy today.

A top Cathie Wood fintech stock

One of my favourites is PayPal (NASDAQ: PYPL), currently the fourth-largest holding in her FinTech Innovation ETF. The major payments company boasts nearly 400m active accounts (including 31m merchants) globally.

PayPal’s business has boomed during the pandemic as consumers have spent online and growth is showing no signs of slowing. In the first quarter of 2021, the company registered total payment volume of $285bn, up 50% year-on-year, and net revenue of $6.03bn, up 29% year-on-year. Non-GAAP earnings per share came in at $1.22, up from $0.66 a year earlier.

Looking ahead, I expect PayPal to continue growing at an impressive rate as the online shopping industry gets bigger. When PayPal’s products are available on an e-commerce website, consumers are nearly three times as likely to complete a purchase. So retailers really can’t afford to not offer PayPal as a payment option.

One risk to the investment case here is the threat of competition. PayPal operates in a highly-competitive industry and faces intense competition from the likes of Square, Visa, and Mastercard.

The stock’s valuation also adds risk. Currently, PayPal sports a forward-looking P/E ratio of about 60, which is high.

I’m comfortable with these risks however. In the long run, I expect this stock to deliver strong returns for investors as the world becomes more digital.

A healthcare stock for the digital age

Another Wood stock I’d buy today is Teladoc Health (NASDAQ: TDOC), which is currently the third-largest holding in the ARK Innovation ETF. It’s a leading provider of virtual healthcare services.

Virtual healthcare has seen a high level of adoption throughout the pandemic and I think it’s here to stay. It’s just so convenient. Of course, there are times when you need to see a doctor face-to-face. However, in many situations, a virtual consultation is perfectly adequate.

Teladoc’s first-quarter 2021 results were very strong. Revenue was up 151% year-on-year to $453.7m while total visits increasing 56% to 3.2m. The company said it expects total revenue for the year to range $1,970m-$2,020m, up from $1,094m last year. Teladoc noted it’s seeing “continued favourable consumer trends,” particularly among Millennials, who are showing a greater and sustained propensity to use digital health than other generations.

However, Teladoc isn’t generating a profit yet. In Q1, its net loss was $199.6m. This adds risk to the investment case. The stock’s high valuation (price-to-sales ratio of about 13) also adds risk.

But overall, I think the long-term risk/reward proposition here’s attractive. I’d buy this disruptive Cathie Wood stock today.

The post Cathie Wood stocks are making a comeback. Here are 2 I’d buy now appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Edward Sheldon owns shares of Mastercard, PayPal Holdings, Teladoc Health, and Visa. The Motley Fool UK owns shares of and has recommended Mastercard, PayPal Holdings, Square, Teladoc Health, and Visa. The Motley Fool UK has recommended the following options: long January 2022 $75 calls on PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recently, however, there have been signs of a comeback. Since their May lows, stocks such as Twilio, DraftKings, and Roku have all bounced around 20%.

This could be a ‘dead-cat-bounce’, of course. In this inflationary environment, there could be further falls to come for high-growth stocks. Nevertheless, I think it’s worth having a nibble at some of these kinds of stocks right now (with a long-term view). With that in mind, here’s a look at two Cathie Wood-owned, high-growth stocks I’d buy for my own portfolio today.

A top Cathie Wood growth stock

One Cathie Wood growth stock I continue to like from a long-term investment point of view is Shopify (NYSE: SHOP). It’s a Canadian technology company that offers an e-commerce platform. Through this platform, retailers can launch an online store effortlessly.

Shopify has grown at an incredible pace in recent years and the company’s first-quarter 2021 results, posted on 28 April, showed more impressive growth. For the period, total revenue came in at $988.6m, up 110% year-on-year, while gross merchandise volume was $37.3bn, an increase of $19.9bn, or 114%. Operating income for the quarter was $118.9m, or 12% of revenue, versus a loss of $73.2m in Q1 2020.

Looking ahead, I expect Shopify to keep growing at an impressive pace, driven by the growth of the e-commerce industry. This year, Wall Street analysts have pencilled in top-line growth of around 50%.

It’s worth noting that Shopify is an expensive stock. Currently, its price-to-earnings (P/E) ratio is over 300. This adds risk to the investment case.

However, we have seen in recent years that not buying a stock because it has a high P/E ratio can backfire. Amazon has consistently had a high P/E over the last five years and in this time, its share price has risen about 350%. So, I’m willing to have a small nibble at Shopify stock at current levels.

Analysts like this stock

A second Cathie Wood-owned growth stock I’d buy right now is Pinterest (NASDAQ: PINS). It’s a social media company that offers a ‘visual discovery’ engine.

This is another company that is generating very impressive growth. Its first-quarter 2021 results, for example, showed revenue growth of 78% year-on-year. Meanwhile, global monthly active users (MAUs) rose 30% to 478m. Looking ahead, Pinterest said it expects revenue growth of around 105% for the second quarter of 2021.

Pinterest is now ramping up the monetisation of its platform. In the first quarter, it achieved average revenue per user (ARPU) of $1.04 globally. There appears to be plenty of room for growth here, however. Rival Facebook currently has an ARPU of around $10.

Pinterest stock is also quite expensive. Currently, PINS sports a forward-looking P/E ratio of about 70. If growth stalls, the stock could take a hit.

I think the long-term growth story here is attractive, however. It’s worth noting that the average analyst price target is $85 – about 33% above the current share price.

The post Cathie Wood-style growth stocks are making a comeback. Here are two I’d buy now appeared first on The Twelfth Magpie.

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• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Edward Sheldon owns shares in Shopify, Amazon, and Pinterest. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Facebook, Pinterest, and Shopify and recommends the following options: short January 2023 $1160 calls on Shopify, long January 2022 $1920 calls on Amazon, long January 2023 $1140 calls on Shopify, and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recently however, many Wood stocks have been caught up in the tech sell-off. Many of her holdings have experienced double-digit declines.

Here, I’m going to highlight two Wood-owned stocks that have fallen 35% from their highs. Should I take advantage of the share price weakness and buy them for my own portfolio?

This Cathie Wood stock is down 40%+

One Wood stock that’s experienced a huge pullback is Zoom Video Communications (NASDAQ: ZOOM). Last year, it was trading near $570 at one point. However today, it’s trading near $320. That represents a decline of over 40%. It’s still up about 130% over a year though.

There’s a number of things I like about the business. For starters, it has a great product. It’s generally accepted that Zoom is the best video conferencing app on the market at present.

Secondly, it has a strong brand. Like Uber and Airbnb its brand has become a verb. For example, people say ‘let’s set up a Zoom call.’ Third, recent growth has been amazing. For 2020, revenue was up 326% to $2.7bn.

I do have some reservations about this Wood stock, however. One is the valuation. Currently, Zoom sports a market-cap of $95bn. That’s bigger than the vast majority of FTSE 100 companies, including the likes of BP and Vodafone. Currently, the stock’s forward-looking price-to-sales ratio is about 24. That’s high, which adds risk.

Another issue is the competition it faces from the likes of Microsoft and Google. Third, it’s hard to know how much we will all use Zoom when the world returns to normal. I expect Zoom to remain popular but, right now, it’s hard to make forecasts about future use.

Given these issues, I’m going to keep Zoom on my watchlist for now.

Wood’s third-largest holding

Another Cathie Wood that’s taken a huge hit in the recent tech sell-off is Teladoc Health (NASDAQ: TDOC), which provides virtual healthcare solutions. This stock – which is currently the third-largest holding in the ARK Innovation ETF – surged up to around $295 last year during the pandemic. However, since then, it’s fallen back to $180 – a decline of nearly 40%. Over a year, it’s up about 20%.

This is a stock I’m quite bullish on. One reason is that the virtual healthcare industry is forecast to grow substantially over the next decade. Between now and 2027, the global virtual healthcare market is expected to grow at around 25% per year.

Another is that the company is growing rapidly. Last year, revenue was up 98% to $1.1bn. This year, the company expects to generate revenue of $1.95bn-$2bn, which would represent top-line growth of 77-82%.

There are risks to the investment case, of course. In the short term, we may see a shift back to in-person doctor visits. This could impact near-term performance. The stock’s price-to-sales ratio of 14 probably doesn’t leave much room for error.

Additionally, the company is facing competition from the likes of Amazon and CVS Health. Amazon, for example, recently launched a telemedicine app.

Overall however, I like the long-term story here. I’d buy this Cathie Wood stock today.

The post 2 Cathie Wood stocks that have fallen 35%+ appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Edward Sheldon owns shares in Teladoc Health, Amazon, Alphabet, and Microsoft. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Airbnb, Inc., Alphabet (C shares), Amazon, Microsoft, Teladoc Health, and Zoom Video Communications. The Motley Fool UK has recommended Uber Technologies and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

One stock Wood is very bullish on at present is Tesla (NASDAQ: TSLA). In a research report published a few weeks ago, Wood said that she expects TSLA shares to be trading at a much higher level by 2025.

Should I buy Tesla stock on the back of Cathie Wood’s bullish view? Let’s take a look.

Cathie Wood has been right about Tesla stock before

Cathie Wood has a strong track record on the stock. Back in 2018, for example, the portfolio manager said that within five years, Tesla would trade at $4,000 ($800 after the five-for-one stock split). At the time, many investors thought she was mad. However, Tesla hit that target earlier this year – two years ahead of schedule.

Wood’s latest forecasts for Tesla stock are mainly based on the prediction that the company will launch an autonomous ‘robo-taxi’ service in the not-too-distant future. In its report, ARK says that it believes there’s a 50% chance Tesla will achieve fully autonomous driving within five years. This could allow the company to scale its planned robo-taxi service quickly.

My thoughts on TSLA stock

While Cathie Wood and her team have clearly done their research, I still have reservations about investing in the stock.

For Tesla stock to justify its current market cap (approx $630bn), I think the company needs to completely dominate the car industry in the future. And I just can’t see that happening.

In the short term, I think Tesla is likely to face an intense level of competition in the electric vehicle space. Pretty much all the other major manufacturers are now getting serious about EVs. Just recently, for example, Volkswagen – which plans to be a major player in the EV space – announced that it plans to build six electric-vehicle battery factories across Europe and make electric vehicles its main product by 2030. Other manufacturers such as Porsche and Ford have recently released new premium EVs that have the potential to steal market share from Tesla.

Meanwhile, in the long term, I don’t think we can assume that Tesla is going to dominate the autonomous vehicle industry. While it;s certainly making progress on this front, it’s likely to face a high level of competition from the likes of Alphabet, Apple, and Baidu in the years ahead.

All things considered, I don’t see Tesla as a good fit for my portfolio right now. In my view, its market cap is still too high, given the level of competition the company is likely to face.

While Cathie Wood is bullish on Tesla stock, I think there are better growth stocks I could buy today.

The post Cathie Wood thinks Tesla stock is going much higher. Should I buy now? appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Alphabet and Apple. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Apple, Baidu, and Tesla and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Here, I’m going to highlight two Wood-owned stocks I’d buy for my own portfolio today. Both have done well over the last year. However, I also believe they’ve a lot of growth ahead.

A top Cathie Wood stock

One Wood stock I like a lot is Teladoc Health (NYSE: TDOC). The leading provider of virtual healthcare services is currently the fourth largest position in the ARK Innovation ETF.

The reason I’m bullish here is I expect the virtual healthcare industry to grow substantially in the years ahead. Ultimately, telemedicine is a win for both patients and healthcare companies. For patients, it’s more convenient. Meanwhile, for healthcare professionals, it’s far more time-effective. According to Mordor Intelligence, the global virtual healthcare market will roughly triple between now and 2026.

TDOC posted a strong set of fourth-quarter and full-year 2020 results last week. For Q4, revenue was up 145% year-on-year to $383m with total visits up 139% to 3m. For the full year, revenue was up 98% year-on-year to $1,094m with total visits up 156% to 10.6m. Adjusted EBITDA for the full year was $126.8m compared to $31.8m for 2019.

There are some risks to be aware of here. One is the valuation. Currently, TDOC has a market-cap of $33bn which equates to a forward-looking price-to-sales ratio of about 17. That’s a high valuation. If future results are disappointing, the shares could fall. The company is also facing competition from the likes of CVS Health.

Overall, however, I think the long-term story here is very attractive. I see the recent share price weakness as a buying opportunity.

An e-commerce powerhouse

Another Wood stock I’m excited about is e-commerce platform Shopify (NYSE: SHOP). The business makes it easy for merchants to build digital storefronts and manage their online operations. Shopify is currently a top 10 holding in both the ARK Innovation ETF and the ARK Fintech Innovation ETF.

The reason I like SHOP is that I expect the e-commerce industry to get much much bigger in the years ahead. By 2027, the global market is set to be worth around $10trn, up from around $4trn in 2020, driven by escalating mobile usage. This market growth should benefit Shopify.

Recent Q4 and full-year results here were impressive. Revenue for Q4 was up 94% to $978m while full-year revenue was up 86% to $2.3bn. The company did warn, however, that sales growth could moderate in 2021 as some consumer spending moves back to retail stores.

Like TDOC, Shopify is an expensive stock. Currently, it has a market-cap of $157bn and sports a price-to-sales ratio of 38. So, there’s certainly some valuation risk here. Another risk to consider is competition in the e-commerce space. Recently, Amazon acquired Selz, a company that also helps businesses launch their own online stores. This suggests Amazon is planning to compete more directly with SHOP.

Given the high valuation, this isn’t a growth stock I’d load up on. However, after the recent share price pullback, I’d be happy to buy a small position for my portfolio.

The post 2 Cathie Wood ARK stocks I’d buy today appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Amazon, Teladoc Health and Shopify. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Shopify, and Teladoc Health and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.