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Cathie Wood has some room to redeem herself this year. The Ark Invest co-founder, CEO, and investor finds her most popular exchange-traded fund to be in the red in 2024, a bad look amid a rising market. Can she get back on track after dominating the market last year? She has no intention of standing still.
Mr. Wood began this new trading week by adding to some existing positions and reducing some to other stocks.she added: toast (NYSE:TOST), meta platform (NASDAQ:Meta)and SoFi technology (NASDAQ:SOFI) Monday stocks. Let’s take a closer look at the three purchases.
1. Cheers
Cathie Wood is no stranger to buying her favorite stocks with dip, but this time she ordered fried egg toast. Shares of the company, which operates a popular point-of-sale system for restaurants, rose on Monday after analysts initiated coverage with a buy rating and a street price target of $32.
Toast has come a long way since taking a hit three months ago when it gave a weak short-term outlook following a mixed third-quarter report. The stock has soared 77% since bottoming in late November and hit a seven-month high on Monday, a nod to Wall Street bulls.
The provider of cloud-based software solutions for the restaurant industry posted a 30% revenue increase in the fourth quarter. Although it missed the market’s highest profit expectations, investors said the situation did not get any worse after Toast warned in November that sales per restaurant were on a negative trend at the beginning of the quarter. I was relieved to know that. Toast is making up for industry stagnation by expanding its reach.
The company’s annual recurring revenue run rate is now $1.2 billion, an improvement of 35% from the end of 2022. Adjusted gross profit and earnings before interest, taxes, depreciation, and amortization (EBITDA) further increased. Toast also announced layoffs and stock buybacks, showing the company is serious about controlling costs and sees the value in rising stock.
At least six analysts have raised their price targets on the stock following this report. The stock still has a long way to go before it returns to its initial public offering price of $40. Even if the analysts’ short-term price targets are the highest, they probably won’t get there. Wood is willing to wait, but it appears Toast isn’t the only company keen to buy its own stock.
2. Metaplatform
Meta has been one of the biggest large-cap winners over the past year. The company, the parent company of Facebook, Instagram, and WhatsApp, has more than quadrupled since the beginning of last year. Meta stock hit an all-time high on Monday.
It was a pretty impressive turnaround for Meta. After more than a decade of consistent double-digit revenue growth, Meta’s sales declined by 1% in 2022. Investors thought users and marketers were tired of the company’s social media applications, but that was just the lull needed to refresh with artificial applications. Powering your digital advertising platform inspired by intelligence (AI).
Meta returned to double-digit revenue growth in 2023, driven by four consecutive quarters of accelerating revenue growth. This is not just a top-line story. Meta also beat analyst revenue estimates in all four quarters last year, boosting its earnings outlook. The stock may have more than quadrupled in the past 14 months, but Meta’s stock somehow trades at a reasonable 25 times this year’s expected earnings.
3. SoFi technology
SoFi stock followed Toast and Meta in not making a new near-term high on Monday. In fact, it’s still falling this year, but that’s after more than doubling in 2023.
There is no news specific to SoFi that would cause the stock price to fall. The last time the banking and fintech provider last had a financial update, it actually did quite well, announcing favorable quarterly results near the end of January. On an adjusted basis, the company has now reported 11 consecutive quarters of profit, and it was also the company’s first to report a profit.
SoFi’s long-term outlook calls for compound annual revenue growth of 20% to 25% over the next three years. The extended rate cut schedule through 2024 may have kept stock prices in check this year, but you probably don’t want to bet on SoFi given its account base, which has risen 44% over the past year.
Should you invest $1,000 in Toast right now?
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Randi Zuckerberg is a former Facebook head of market development and spokesperson, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Rick Munarriz has a position in Toast. The Motley Fool is affiliated with and recommends Meta Platforms and Toast. The Motley Fool has a disclosure policy.
The first edition of Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was published by The Motley Fool
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