Cathie Wood goes on a bargain hunt: 3 stocks she just bought

ARK Invest CEO Cathie Wood has been getting a lot of attention lately as her company’s exchange-traded funds (ETFs) have delivered impressive returns.

And investors looking for some of Wood’s top picks to add to their own portfolios would be wise to take a closer look at a few tech companies she acquired when their stock prices fell recently. Among which Unity software (NYSE:U), JD.com (NASDAQ:JD), and Roblox (NYSE:RBLX). This is why three Motley Fool contributors believe investors should consider buying these stocks now.

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Tap video games, 3D creation, virtual reality and more

Danny Vena (Unity software): One stock that Cathie Wood has bought hand over hand in recent weeks is Unity Software. Wood has expanded his already substantial positions in four of ARK’s six flagship ETFs, bringing Unity to the top 10 in three of them. All together, the four funds own more than 10.6 million shares of the stock, valued at more than $1.2 billion.

It’s easy to see why Wood is so excited about Unity Software. The company provides the world’s leading platform for creating and serving interactive, real-time 3D content. It provides a comprehensive set of tools and software that enables developers to create 2D and 3D content for mobile phones, tablets, PCs and consoles, as well as augmented reality and virtual reality devices.

Unity has unparalleled scale and scope. In fact, 53% of the top 1,000 mobile games on Apple‘s App Store and AlphabetGoogle Play’s store — as well as over 50% of mobile, PC, and console games combined — are made using the Unity platform. The company has 1.5 million active creators in 190 countries each month, generating more than 3 billion app downloads per month.

What draws developers to Unity is the ability to see and modify their creations in real time. This results in a significant reduction in design and development time, making developers more productive. It also helps them respond in real time and adapt their games and apps to the feedback from end users. Games built on Unity’s platform can be created once and deployed instantly on over 20 popular platforms, including: MicrosoftWindows and Xbox, Sony This includes PlayStation, Mac, iOS and Android.

Unity’s annual sales for 2020 increased 43% year over year to $772 million. That strong growth continued into the first quarter, with revenue of $235 million, up 41%. Like many fast-growing early-stage companies, Unity is awash in red ink, but the news isn’t all bad. Adjusted for one-off IPO-related costs, the operating loss improved by 45% in 2020.

Wood has other reasons to invest heavily in Unity Software. At ARK Invest’s Big Ideas for 2021 report, she pointed out that revenues from virtual worlds — including video games, augmented reality and virtual reality — are expected to grow 17% per year in the coming years, from $180 billion today to $390 billion in 2025. a large and growing ecosystem, Unity could be one of the biggest beneficiaries of this accelerating trend.

Finally, Unity Software’s stock is currently available at a bargain basement price, selling for 31% of recent highs.

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Maybe it’s time to get in on this ecommerce leader

Brian Withers (JD): JD.com seems to be a favorite of Cathie Wood. Not surprisingly, it is the second largest holding company in the ARK. is Autonomous Technology and Robotics ETF, as the leading Chinese retailer relies on robotic technology for warehouse functions and even last-mile deliveries. But this technology company also has a stake in three other ARK ETFs. Let’s see why Wood has been adding more stocks in recent weeks.

First, the stock is down more than 30% from its high, and not because the company is underperforming. In fact, the company just presented great first quarter results. Second, the ARK funds have held shares of JD since mid-2017, and in the first quarter, the funds doubled the number of shares over the course of the quarter. It is likely that these purchases will take place during the course of this year and the recent purchases show that they are excited about the company’s performance, long-term prospects and valuation.

Let’s look at the most recent quarter. Not surprisingly, sales declined sequentially from the holiday quarter, but managed to exceed analyst expectations, posting a 39% year-over-year increase. Corporate income from operating activities remains in the black, but still has thin margins as it invests profits in growth efforts. Finally, and probably most exciting for investors, the platform continues to attract customers at a rapid pace, even with hundreds of millions already on the platform.

Data source: Publication of company income. QOQ = quarter over quarter. JOY = year on year.

Looking ahead, the company is expanding its reach in rural China. In the past 12 months, more than 80% of the 112 million new active customers came from lower markets. And the company is expanding its presence to better serve those regions. With more than 1,000 warehouses across the region, the logistics team can now reach almost the entire country with fast delivery services. Finally, the newly formed business group Jingxi was established to serve price-sensitive customers in lower regions. In the first quarter of its business, Jingxi serves 17 provinces with its e-commerce business.

There’s a lot to like about this leading Chinese e-commerce retailer’s business, especially with its stock trading at reasonable valuations. As compared to Sea Limited‘s lofty price-to-sale ratio of 25 and Free marketAt 16, JD shares are valued at a 1 P/S ratio. In addition, it has a P/E ratio of a cool 15 while its Latin American and Southeast Asian counterparts have no profit to include a P/E ratio.

It’s no wonder that Cathie Wood’s investment team and the ARK are expanding their position with the stock at a discount from its recent high. Maybe it’s time you did the same?

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This video game stock is anything but child’s play

Chris Neiger (Roblox): Roblox is a popular video game platform that allows users to not only play games but also create their own games – and it has been a huge success so far.

Cathie Wood also took note of the company and bought more shares of Roblox last week. The stock is down about 4% in the past 30 days, which may have prompted Wood’s funds to expand their Roblox position.

And investors would be wise to follow in Wood’s footsteps. Roblox has created a video game platform unlike anything its competitors have, adding new players and increasing platform engagement at a healthy clip.

Roblox has more than 43 million daily active users, 8 million developers creating games on its platform and 100 million active users worldwide.

In the most recent quarter, revenue grew 140% from the same quarter a year ago, with users spending 9.8 billion hours spent on the platform, up 98% year over year.

Investors should know that this company is unprofitable (it posted a loss of $134 million in the most recent quarter), and it didn’t go public until March. Both factors mean that the stock price can be volatile in the short term as the company continues to grow.

But the long-term potential for this company is solidly intact. Roblox leverages the burgeoning video game market estimated to grow from $157 billion last year to $293 billion by 2027.

And with the company’s impressive user base, growing developer base and unique position of letting its own users create games for the platform, investors may want to follow Wood’s lead and buy some stock for their own portfolio.