Warren Buffett famously stated that it's smart to "be fearful when others are greedy and be greedy when others are fearful." Cathie Wood stands out as a great example of an investor heeding the latter part of Buffett's advice.
All of Wood's ARK Invest exchange-traded funds (ETFs) are down significantly this year. Her flagship ARK Innovation ETF (NYSEMKT: ARKK) has plunged more than 55%. But she's not afraid to invest even more heavily. Wood is loading up on these three stocks. Should you?
1. Ginkgo Bioworks
Last week, Wood's ARK Genomic Revolution ETF (NYSEMKT: ARKG) bought over 2 million shares of Ginkgo Bioworks (NYSE: DNA). Those purchases followed a significant amount of buying earlier in September and in previous months.
Ginkgo Bioworks specializes in cell programming. The company's goal is to make programming cells as easy to do as programming computers. Its technology is used in a wide variety of applications, including agriculture and food, industrial chemicals, and pharmaceuticals.
The stock has been a big loser so far this year, sinking close to 65%. Wood, though, definitely likes Ginkgo's potential. She's probably especially optimistic about the company's acquisitions activity, including its pending deals to buy Zymergen and Bayer's West Sacramento agricultural biologicals R&D facility.
Aggressive investors could, like Wood, think that Ginkgo is a monster stock in the making. Its platform could be disruptive. The company's revenue is growing fast, soaring 231% year over year in the second quarter of 2022.
Risk-averse investors will probably want to stay away from Ginkgo, though. The company remains unprofitable. It's also a little on the pricey side with shares trading above 8.4 times sales even after the steep decline this year.
2. Intellia Therapeutics
Wood's ARK Genomic Revolution ETF also added significantly to its position in Intellia Therapeutics (NASDAQ: NTLA) last week, buying 318,875 shares. The ETF completed other purchases of the genomics stock intermittently throughout 2022 as well.
Intellia ranks among the handful of companies that are pioneering the development of therapies using CRISPR gene editing. It's working with Regeneron on NTLA-2001, which targets rare genetic disease transthyretin (ATTR) amyloidosis. The company partnered with Novartis to develop experimental sickle cell disease therapy OTQ923 / HIX763. Intellia's pipeline includes another clinical-stage program that it fully owns -- NTLA-2002, which targets hereditary angioedema.
This is another stock that has fared poorly so far in 2022. Intellia is down close to 50%. This decline stemmed in part from the overall dismal stock market environment. However, Intellia also disappointed investors with its decision to throw in the towel on early-stage testing of NTLA-5001 as a potential treatment for acute myeloid leukemia.
Is the beaten-down stock now a buy? Only those with a high-risk tolerance and a long investing time horizon should seriously consider Intellia. It could be years before the company has a product on the market. Intellia could also experience clinical setbacks along the way. But for some investors, the disruptive potential for the biotech's gene-editing therapies could make the risks worth taking.
3. Teladoc Health
Wood has been a stalwart supporter of Teladoc Health (NYSE: TDOC) for quite a while. The stock is a holding of several of her ETFs. One of them, ARK Innovation ETF, scooped up another 44,359 shares of Teladoc last week.
Teladoc is practically synonymous with telehealth. The company offers the broadest range of virtual care services. Its customer base includes over half of the Fortune 500.
But telehealth has lost much of its luster for investors since the early days of the COVID-19 pandemic. Teladoc has especially been hit hard, with the stock plunging nearly 70% this year on top of a 54% drop in 2021. The company continues to feel the pain of paying a sky-high price to acquire Livongo Health in 2020. The company took a $3 billion goodwill impairment in Q2 related to this transaction.
Some might view Teladoc as a lost cause. Wood obviously doesn't. Should others share her optimism? As was the case with Ginkgo and Intellia, risk-averse investors will probably be better off staying away from Teladoc.
However, there's still a big opportunity for virtual care over the next decade and beyond. Teladoc remains the clear leader in the market. The stock trades at only 2.2 times sales. It's possible that Teladoc could be a huge comeback story within the next few years.
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