The growth-focused money manager added to these three existing positions on Monday.
Cathie Wood has some ground to make up this year. The Ark Invest co-founder, CEO, and investor finds her most popular exchange-traded fund in the red in 2024, a bad look in a rising market. After trouncing the market last year, can she get back on track? She is not going to be standing still.
Wood kicked off this fresh trading week by adding to some of her existing positions and pruning some of her other stakes. She added to her Toast (TOST 0.38%), Meta Platforms (META -0.19%), and SoFi Technologies (SOFI 3.75%) shares on Monday. Let's take a closer look at these three purchases.
1. Toast
Cathie Wood has a knack for buying some of her favorite stocks on dips, but this time she ordered a side of Toast when it was sunny side up. Shares of the company behind the popular point-of-sale system for eateries moved higher on Monday after an analyst initiated coverage with a buy rating and a Street-high price target of $32.
Toast has come a long way since taking a hit after offering weak near-term guidance following a mixed third-quarter report three months ago. The stock has soared 77% since bottoming out in late November, hitting a seven-month high on Monday after the bullish Wall Street pro nod.
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The provider of cloud-based software solutions for the restaurant industry posted a 30% increase in revenue for the fourth quarter. It was just shy of the market's top-line expectations, but investors were relieved to see that it wasn't worse after Toast warned in November that transaction volume per eatery was trending negatively early in the quarter. Toast is making up for the industry lull by growing its reach.
Its annualized recurring revenue run rate is now $1.2 billion, a 35% improvement from where it was at the end of 2022. Its adjusted gross profit and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose even higher. Toast also announced layoffs and a share buyback, signs that it's serious about cost controls as well as sensing value in its ascending shares.
At least six analysts would go on to jack up their price targets on the stock following the report. The stock still has a long way to go to return to its initial public offering (IPO) price of $40. Even the highest of analyst near-term price targets won't get Toast there. Wood doesn't mind waiting, and apparently it's not just Toast bent on buying its shares.
2. Meta Platforms
Meta is one of the biggest large-cap winners over the past year. The parent company of Facebook, Instagram, and WhatsApp has more than quadrupled since the start of last year. Meta shares hit an all-time high on Monday.
It's been a pretty spectacular recovery for Meta. After more than a decade of consistent double-digit revenue growth, Meta's top line declined 1% in 2022. Investors figured that users and marketers were tiring of its social media applications, but it was just the lull it needed to refresh itself with an artificial intelligence (AI)-inspired boost to the digital advertising platform.
Meta returned to double-digit revenue growth in 2023, fueled by four consecutive quarters of accelerating revenue growth. It's not just a top-line story here. Meta also landed ahead of analyst earnings estimates in all four quarters last year, boosting its guidance along the way. The stock may have more than quadrupled over the last 14 months, but Meta is somehow trading at a reasonable 25 times this year's projected earnings.
3. SoFi Technologies
Shares of SoFi didn't follow Toast and Meta in hitting a near-term high on Monday. It's actually still trading lower this year, but that was after more than doubling in 2023.
There hasn't been any SoFi-specific news to account for the stock's slide. The last time that the digital banking and fintech provider had a financial update it was actually pretty good, posting well-received quarterly results near the end of January. It even came through with its first case of positive reported income, even though it has been in the black on an adjusted basis for 11 straight quarters now.
SoFi's long-term outlook calls for 20% to 25% compound annual revenue growth over the next three years. The stock may have been kept in check this year once the timeline for rate cuts was extended deeper into 2024, but with an account base that has risen 44% over the past year you probably don't want to bet against SoFi.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rick Munarriz has positions in Toast. The Motley Fool has positions in and recommends Meta Platforms and Toast. The Motley Fool has a disclosure policy.
