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The rise in the market for growth stocks is changing the way Ark Invest co-founder and CEO Cathie Wood approaches portfolio volatility. She has spent most of her past few years adding to her existing stock in Dips. Now she’s not afraid to buy on the rise.
Wood buys stock Palantir Technologies (NYSE:PLTR), toast (NYSE:TOST)and Roku (NASDAQ:ROKU) Thursday made some of her biggest stops. While Roku has been down lately, Palantir and Toast hit recent highs on Thursday. Let’s take a closer look at the three purchases.
1. Palantir
Palantir stock hit another two-year high on Thursday. The intelligence community software developer’s stock has more than quadrupled since early last year.
The main impetus for this week’s gathering was the announcement that it had been awarded a $178.4 million contract to develop and deliver a new ground targeting system for the U.S. military. Palantir has been creating software for the military and other government contractors for years, so it wouldn’t be surprising to see it land even bigger deals on this front. However, it has recently achieved great success in the private sector as well.
This week’s rally hasn’t had all Wall Street pros sold. Mizuho Analyst Greg Moskowitz raised his price target to $21 from $18, but his rating on the stock is neutral. Palantir stock is trading well above his new price target. Earlier this week, RBC held firm to its minimum street price target of $5, asserting that a new Army TITAN contract is likely already factored into Palantir’s outlook.
Palantir is one of the few stocks that has skyrocketed since it was hailed as a play on artificial intelligence (AI). It’s not just hype. Last month, Palantir reported better-than-expected results, with revenue up 20% and adjusted earnings per share of $0.08. Palantir has had its ups and downs, but its stock has now more than doubled from its 2020 IPO price of $10.
2. Cheers
Toast stock hit a seven-month high on Thursday. If you eat at restaurants or get takeout, chances are you’re familiar with Toast. He is a leading provider of cloud-based POS platforms for restaurants. Currently, 106,000 stores accept orders and settle transactions on his Toast-branded devices.
The company impressed investors three weeks ago with a 35% increase in revenue in its latest quarter. The 32% increase in total payments did not keep pace with the 34% increase in store count over the past year, although Toast warned last quarter that transaction value per restaurant was on the decline during the holiday season. .
The stock is up 36% so far in 2024, far outpacing the broader market’s 8% gain. It may not be Palantir, which is up 54% year-to-date, but Toast has certainly been profitable for shareholders lately.
3. Roku
Palantir and Toast have been market winners so far this year. That’s not the case with Roku, whose stock is down 31% in 2024. A poor quarterly report last month and the threat of a new competitor sent the stock, which had more than doubled in 2023, into a tailspin.
Roku is more in the mold of old-school Wood additions than Palantir or Toast. It is her top holding, currently occupying the No. 5 position in Ark Investment’s overall portfolio, but will move down from that position. She hopes Roku’s dominance in a growing niche market with 80 million active accounts will make the deal pay off well over time.
Roku’s mid-February financial update featured healthy double-digit revenue growth. We also saw encouraging double-digit improvements in operating costs and bottom line loss reductions. But an astonishing series of declines in average revenue per user has spooked those who were bullish on streaming service stocks. They’ll be keeping a close eye on Roku’s next quarterly update. And with Roku, you don’t care about attracting an audience.
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Rick Munarriz has positions at Roku and Toast. The Motley Fool has positions in and recommends Palantir Technologies, Roku, 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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