Teladoc Health (TDOC)
Teladoc Health is one of the leading telemedicine companies in the U.S. It has a consistent track record of revenue growth and margin improvement.
Not surprisingly, the company benefited from the extraordinary environment brought on by COVID-19.
When non-life-threatening, in-office medical care was put on hold during the peak of the pandemic, telehealth adoption exploded.
Teladoc’s revenue increased 98% in 2020 to $1.09 billion, with total visits surging 156%.
The momentum continued in 2021, as the company posted 86% revenue growth and an increase in total visits of 38%. It also generated $194 million in operating cash flow for the year — a significant jump compared to negative $54 million in 2020.
Teladoc stock is down over 32% year to date, but remains ARKK’s second-largest holding, accounting for 6.5% of the fund’s weight.
Wood is not the only one who sees potential in the telemedicine company. On Feb. 11, Goldman Sachs analyst Cindy Motz initiated coverage on Teladoc with a buy rating and a price target of $121, emphasizing that the company is “paving the way for the healthcare technology sector to become more disruptive.”
Motz’s price target implies potential upside of roughly 100%.
Unity Software (U)
Often touted as a top-tier metaverse play, video game software development company Unity garnered a lot of investor attention last year.
In November, the company acquired the visual effects studio behind “Avatar” and “Lord of the Rings.” The stock soared to over $200 per share on Nov. 18 but quickly gave up the gains.
Today, Unity trades at around $97 apiece, down over 50% from those 52-week highs.
Business, however, has continued to grow rapidly.
In Q4 of 2021, revenue rose 43% year-over-year to $315.9 million. Adjusted net loss was 5 cents per share, compared to an adjusted net loss of $0.10 per share incurred in the year-ago period. The numbers also topped Wall Street’s expectations, as analysts were projecting a loss of 7 cents per share on $295.5 million of revenue.
While shares continue to trade at beaten-down levels, Unity remains one of the top 10 holdings at Wood’s flagship fund, with a weighting of 4.9%.
On Feb. 4, Credit Suisse reiterated an outperform rating on Unity and set a price target of $180 — roughly 86% above the current levels.
Investors looking for contrarian ideas should check out Block, the digital payments technologist formerly known as Square.
Management changed the name in December because “Square” had become synonymous with the company’s seller business. But the move did little to cheer up investors. Year to date, Block shares have tumbled more than 40%.
While the company is far from a market favorite right now, it continues to deliver some very impressive growth numbers.
In Q3 of 2021, revenue rose 27% year over year while gross profit increased 43%.
Improvement was across the board. For the quarter, transaction-based revenue surged 40% year over year, thanks to a 43% increase in gross payment volume. Subscription and services-based revenues, meanwhile, jumped 55% from a year ago.
Block is also a play on cryptocurrency. In Q3, the company’s Cash App generated $1.82 billion of bitcoin revenue and $42 million of bitcoin gross profit.
Ark Invest owns just under 4.8 million shares of Block, making it the 10th largest holding of the portfolio with a weighting of 4.2%.
On Feb. 11, Bank of America analyst Jason Kupferberg upgraded Block from neutral to buy with a price target of $185, noting that the company is now “quite undervalued.”
Kupferberg’s price target implies a potential upside of about 95% from where the stock sits today.
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