Sep 21, 2021
Stable dividend stocks are great for the risk-averse.
But for investors looking to add some pop to their portfolios, nothing beats the long-term upside of rapidly expanding growth stocks.
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Companies that are growing their sales and earnings at an especially fast pace:
- Have higher appreciation potential than the average stock.
- Often provide triple-digit, even quadruple-digit returns, in a short period of time.
And there’s no better place to look for high-quality growth stocks than the portfolio of Cathie Wood, the ace stock picker behind the wildly successful investment firm Ark Invest.
Let’s take a quick look at three Ark Invest holdings.
All of these stocks have slumped recently, so you might even be able to pick them up at a better price than Wood's latest buys — maybe with some spare change.
DraftKings (DKNG)
Leading off our list is DraftKings, which has grown its revenue at an annual average rate of 50% over the past five years. But over the past five days, the stock has shed nearly 10%.
As of Sept. 21st, Wood’s flagship Ark Innovation ETF (ARKK) held about 10 million shares of the daily fantasy sports giant, worth about $570 million and representing 2.7% of the portfolio.
Given the increased popularity of sports betting and fantasy sports, it’s no surprise that Wood loves the stock.
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According to estimates from Morgan Stanley, the U.S. sports betting market could hit a whopping $15 billion annually by 2025. And given DrafKings’ already entrenched leadership position in the online betting world, it’s in a perfect spot to capitalize.
In the most recent quarter, revenue skyrocketed 320% year-over-year as 1.1 million monthly unique paying customers engaged with the app during the quarter.
If you’d like to diversify your bets in the space, traditional brick-and-mortar casinos like MGM Resorts, Caesars Entertainment, and Penn National Gaming continue to ramp up their online sports gambling presence at a breakneck pace.
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Shopify (SHOP)
Next up, we have e-commerce giant Shopify, which has grown its revenue at an annual average rate of 70%.
Currently, ARKK owns a little more than 559,000 shares of the company worth about $802.2 million. At 3.8% of the portfolio, it’s ARKK’s seventh-largest holding.
Shopify has grown into one of the leading e-commerce platforms for small businesses, and with more and more merchants requiring an online presence to survive, the company remains one of the best plays on those digital tailwinds.
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In Q2, Shopify achieved its first-ever $1 billion revenue quarter as gross merchandise volume grew to a record $42.2 billion.
While other e-commerce plays include obvious stocks like Amazon and eBay, Shopify’s budding software niche might be more attractive for those seeking more upside.
Even after a steady slide in recent weeks, Shopify trades at more than $1,400 per share. But you can get a piece of Shopify using a popular stock trading app that allows you to buy fractions of shares with as much money as you’re willing to spend.
Palantir Technologies (PLTR)
Rounding out our list is Palantir Technologies, which has grown its top line at an impressive clip of 47% over the past year.
ARKK owns just under 26 million shares of the data mining technologist roughly worth $688.6 million. The investment represents ARKK’s eleventh-largest holding with a portfolio weighting of 3.3%.
Palantir’s margin expansion and revenue growth opportunities continue to be backed by a leading position in the government space and an ever-increasing presence with other commercial applications.
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Wood has commented specifically on Palantir’s aggressive investment strategy and consistent public-sector revenue as her main reasons to be bullish.
Big data companies like Snowflake or Salesforce are other solid ways to get into space, but Palantir’s niche expertise of data-based discovery gives it an attractive long-term edge.
Palantir shares are down 9% in just the past two days. But if you're on the fence about jumping in, some investing apps will give you a free stock of Palantir just for signing up.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Diversify with rental income?
If these innovative tech stocks seem too speculative for you, assets that produce cold, hard cash might be more up your alley.
And you don't have to limit yourself to the stock market to find them.
For instance, some popular investing services make it possible to lock in a steady rental income stream by investing in premium real estate properties — from commercial developments in LA to residential buildings in NYC.
You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to, and you’ll receive regular payouts in the form of quarterly dividend distributions.
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Brian is an editor for Moneywise. A long-time stock junkie, his work has appeared in The Motley Fool, Seeking Alpha, and Yahoo Finance. He believes in owning "Forever Stocks" — a rare group of businesses that have paid out dividends for decades. Brian holds the Chartered Financial Analyst (CFA) designation.
