© Reuters. Steer Clear of These 4 Cathie Wood Stocks
Cathie Wood’s flagship Ark Innovation ETF (ARKK) has been experiencing a sharp pullback since March. The continuing tech sell-off and rising Treasury yields have sapped the momentum from some of her biggest bets. We think four companies held by ARKK, namely Twilio (NYSE:), Teladoc Health (NYSE:), CRISPR Therapeutics (CRSP) and Invitae (NYSE:), are best avoided now because they are expected to incur hefty losses until next year. Read on.Investor Cathie Wood, the founder of Ark Investment Management Services, LLC, operates the world’s largest actively traded ETF. She is known for her bullish stance on Tesla, Inc. (NASDAQ:). Its gains from this stock put ARK Innovation ETF (ARKK) on the map as one of the most successful, industry-disruptive tech ETFs delivering manifold returns. However, the renowned ETF has been losing momentum since March. Specifically, it has declined 19.1% over the past three months due to investors’ rotation away from overvalued tech stocks. ARKK has declined 6.7% over the past five days, and 12.8% since March 1.
As a highly regarded investor on Wall Street, Wood’s bets are replicated by millions of investors worldwide. However, her contrarian investment approach can lead investors to big losses on their bets because many investors do not possess sufficient capital to hold their investments for the long term. As the U.S. focuses on mass vaccine distribution and infrastructure development, technology has taken a backseat as the “it” investment sector. Furthermore, with rising benchmark Treasury yields making equities less attractive, investors are fixating now on companies with solid fundamentals and strong growth potential in the short term.
ARKK holdings Twilio Inc. (TWLO), Teladoc Health, Inc. (TDOC) CRISPR Therapeutics AG (CRSP) and Invitae Corporation (NVTA) possess weak earnings growth outlooks. In fact, their earnings are expected to decline in the coming quarters or years. While Wood possesses the requisite capital to hold her investment positions until these companies’ fortunes improve, we think these stocks might not be well suited for retail investors.
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