Investors in high-growth, ‘Cathie Wood-style’ stocks have had a tough few months. Since bond yields started rising in mid-February, many of these stocks have fallen 30%+.
Recently, however, there have been signs of a comeback. Since their May lows, stocks such as Twilio, DraftKings, and Roku have all bounced around 20%.
This could be a ‘dead-cat-bounce’, of course. In this inflationary environment, there could be further falls to come for high-growth stocks. Nevertheless, I think it’s worth having a nibble at some of these kinds of stocks right now (with a long-term view). With that in mind, here’s a look at two Cathie Wood-owned, high-growth stocks I’d buy for my own portfolio today.
A top Cathie Wood growth stock
One Cathie Wood growth stock I continue to like from a long-term investment point of view is Shopify (NYSE: SHOP). It’s a Canadian technology company that offers an e-commerce platform. Through this platform, retailers can launch an online store effortlessly.
Shopify has grown at an incredible pace in recent years and the company’s first-quarter 2021 results, posted on 28 April, showed more impressive growth. For the period, total revenue came in at $988.6m, up 110% year-on-year, while gross merchandise volume was $37.3bn, an increase of $19.9bn, or 114%. Operating income for the quarter was $118.9m, or 12% of revenue, versus a loss of $73.2m in Q1 2020.
Looking ahead, I expect Shopify to keep growing at an impressive pace, driven by the growth of the e-commerce industry. This year, Wall Street analysts have pencilled in top-line growth of around 50%.
It’s worth noting that Shopify is an expensive stock. Currently, its price-to-earnings (P/E) ratio is over 300. This adds risk to the investment case.
However, we have seen in recent years that not buying a stock because it has a high P/E ratio can backfire. Amazon has consistently had a high P/E over the last five years and in this time, its share price has risen about 350%. So, I’m willing to have a small nibble at Shopify stock at current levels.
Analysts like this stock
A second Cathie Wood-owned growth stock I’d buy right now is Pinterest (NASDAQ: PINS). It’s a social media company that offers a ‘visual discovery’ engine.
This is another company that is generating very impressive growth. Its first-quarter 2021 results, for example, showed revenue growth of 78% year-on-year. Meanwhile, global monthly active users (MAUs) rose 30% to 478m. Looking ahead, Pinterest said it expects revenue growth of around 105% for the second quarter of 2021.
Pinterest is now ramping up the monetisation of its platform. In the first quarter, it achieved average revenue per user (ARPU) of $1.04 globally. There appears to be plenty of room for growth here, however. Rival Facebook currently has an ARPU of around $10.
Pinterest stock is also quite expensive. Currently, PINS sports a forward-looking P/E ratio of about 70. If growth stalls, the stock could take a hit.
I think the long-term growth story here is attractive, however. It’s worth noting that the average analyst price target is $85 – about 33% above the current share price.
