ARK Invest ETFs are extremely popular with growth investors right now. It’s not hard to see why. These funds, which are managed by legendary portfolio manager Cathie Wood and her team, have delivered enormous gains for investors recently. The ARK Disruptive Innovation ETF, for example, returned more than 150% last year.
At the moment, most UK stockbrokers don’t offer the ARK Invest ETFs unfortunately. This means it’s generally not possible for UK investors to invest directly in these funds. That said, it is possible to invest in most of the publicly-listed stocks held within the ARK ETFs. With that in mind, here’s a look at three ARK stocks I’d buy for my ISA today.
A tech powerhouse
One ARK stock I’m very bullish on is tech giant Alphabet (NASDAQ: GOOG), the owner of Google and YouTube. It’s currently the sixth largest holding in the ARK Autonomous Technology & Robotics ETF.
There are a few reasons I’m bullish on Alphabet. Firstly, it’s one of the biggest players in the digital advertising space. The online advertising market was valued at around $304bn in 2019 and is expected to reach $980bn by 2025. This means there’s significant growth potential here.
Secondly, the company has plenty of growth potential in other exciting areas such as streaming, cloud, and autonomous vehicles.
Another thing I like about Alphabet is that its valuation isn’t excessive. Its forward-looking P/E ratio is only about 28. At that valuation, I think the stock offers a fantastic risk/reward proposition. I’ve made it one of my largest holdings.
An online shopping champion
The next ARK stock I like is Shopify (NYSE: SHOP). It’s held in a few different ARK ETFs. Shopify is a leading player in the e-commerce space. Globally, more than one million merchants rely on its platform to sell their goods online. E-commerce is one of the growth themes I’m most excited about in 2021 and I see SHOP as a great way to gain exposure to the theme.
Shopify’s revenues are booming at the moment. For 2020, revenue is expected to come in at around $2.85bn, up from $1.07bn in 2018. Analysts currently expect revenue of $3.75bn and $5.09bn for FY2021 and FY2022 respectively.
Shopify shares aren’t cheap. The company’s market cap is over $100bn now and its forward-looking P/E ratio is over 300. This adds risk to the investment case. However, I believe the long-term growth story here is very attractive.
An under-the-radar ARK stock
Finally, the third ARK stock I’d buy right now is Okta (NASDAQ: OKTA). It’s held in the ARK Next Generation Internet ETF.
Okta is an under-the-radar company that provides identity management solutions. Its cloud-based solutions help companies secure their most critical resources while enabling employees to work remotely. Currently, Okta has nearly 10,000 customers including the likes of Zurich, Renault, and The Motley Fool!
Okta’s revenues have surged in recent years as businesses have rushed to protect themselves from cybercrime. Last year, sales came in at $586m, up from $257m two years earlier. Looking ahead, analysts expect sales of $823m for the year ending January 2021 and $1.07bn for the year after.
This stock isn’t cheap. It trades on a price-to-sales ratio of about 30, which adds risk to the investment case. However, cybersecurity is a massive theme that has enormous growth potential going forward. So, I think this ARK stock is worth the risk.
