This Cathie Wood stock has skyrocketed and could make you rich over time

Cathie Wood, founder and CEO of investment management firm Ark Invest, has made investments widely popular on Wall Street thanks to her strategy of buying stocks in companies capable of disruptive innovation. home and believe it will provide solid returns in the long run.

Mr. Wood’s flagship fund. Ark Innovation ETFbenefited from this strategy in 2023 and recorded an impressive return of 70%. Of course, the famous investor’s philosophy of buying high-risk, high-reward companies also means there are periods of volatility, as evidenced by the big hit Wood’s fund took in 2022. be. This also explains why Wood has a five-year investment timetable. This allows her investments to weather volatile times.

The good news is that Wood’s investments could benefit from a favorable stock market scenario in 2024. A potential interest rate cut by the Federal Reserve could hurt growth stocks well in the new year, so investors may be hoping for the following: Buy one of Wood’s top 10 holdings before it soars.

shares of Twilio (TWLO -1.69%) It’s up 52% ​​since the beginning of November. Let’s take a look at why this tech stock can maintain its impressive momentum and rise even higher.

Twilio has a lucrative business opportunity

Twilio is the 9th largest component of the Ark Innovation ETF, and it’s worth noting that Wood and her team are actively buying shares of the cloud communications specialist in 2023. This is not surprising since Twilio operates in a market that is expected to grow rapidly. A solid pace over the long term.

Twilio’s cloud-based software platform allows businesses to communicate with customers through multiple channels including text, voice, email, chat, and video. Customer service representatives can connect with customers from anywhere in the world as long as they have a computer and the Internet.

These cloud-based contact centers have several advantages over traditional contact centers. For example, with a cloud contact center, companies don’t have to spend on infrastructure such as office space or on-site servers. It can be easily scaled based on your organization’s requirements and can also help improve your customer service experience by allowing your employees to reach customers using different channels.

Unsurprisingly, the need for cloud-based contact centers will grow at a compound annual growth rate (CAGR) of 26% through 2028, reaching $69 billion in annual revenue by the end of the forecast period, according to Mordor Intelligence. It is predicted that. Performances like this should help Twilio emerge from its recent downturn caused by a weak customer spending environment.

The company is expected to end 2023 with a 7% increase in revenue to $4.1 billion, with similar increases expected to continue next year. However, Twilio’s growth is predicted to accelerate from his 2025 onwards, as the following graph shows.

TWLO earnings forecast data for current year by YCharts

There is definite upside potential in the long term.

Twilio management noted in the company’s investor presentation in November 2022 that it expects revenue to grow at a CAGR of 15% to 25% over the medium term. Assuming Twilio can maintain his 15% revenue growth rate over his three years starting in 2026, based on his 2025 revenue forecast of $5 billion, its sales will increase in his 2028 In 2019, his earnings could jump to $7.65 billion.

Twilio’s five-year average sales multiple is 15x, but its current sales multiple is just 3.5x. Assuming it can maintain its current sales multiple five years from now, Twilio’s market cap could jump to nearly $27 billion, based on estimated 2028 sales of $7.65 billion. This is a 94% jump from current levels and suggests that Cathie Wood stock is on the way. ” could provide investors with healthy returns over five years.

And finally, Twilio’s current price-to-sales ratio is significantly lower than its five-year average, so investors should consider buying now for the potential returns it could bring over the long term. need to do it.