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Cathie Wood added to her existing positions in Nvidia, DoorDash, and Intuitive Surgical to kick off this trading week.
Nvidia shares have more than doubled since their April lows, but the stock is trading at a reasonable 30 times next year's earnings target.
DoorDash and Intuitive Surgical have very different stock charts, even though the one that is going the wrong way is the one serving up accelerating growth.
Cathie Wood is built for rallying markets. The co-founder, CEO, and chief investment officer of Ark Invest is crushing the market this year, proving that she can catch 2020 in a bottle again. Ark's daily transactions are announced at the end of the day. Like a tribute band on tour, Wood is mostly playing her hits.
Ark bought shares of Nvidia (NASDAQ: NVDA), DoorDash (NASDAQ: DASH), and Intuitive Surgical (NASDAQ: ISRG) on Monday, adding to existing positions. Nvidia and DoorDash are rolling these days, but Intuitive Surgical has been a market laggard. Let's take a closer look.
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Nvidia is hitting fresh highs. The world's most valuable company by market cap has now more than doubled since bottoming out in early April. The lead horse in the artificial intelligence (AI) revolution has earned its upticks, and it's easy to kick yourself for missing the near-term bottom a little more than three months ago. Resist the urge to take it out on yourself.
Nvidia was in bad shape heading into April's rally. Between a Chinese start-up bragging about delivering generative AI without springing for Nvidia's priciest chips and export restrictions into China costing it billions in suspended sales, it was easy to wonder if one of the market's best performers over the past five years was done as a bellwether.
Image source: Getty Images.
Is it ever too late to buy a dynamic growth stock? Buying Nvidia right now for 55 times trailing earnings doesn't seem cheap, especially for the handful of people who nailed the bottom on April 7. Now look at it through the windshield instead of the rearview mirror. Nvidia is trading for just 30 times next year's projected profit of $5.84 a share, a target that keeps rising. Nvidia has consistently exceeded bottom-line expectations. You don't want to bet against the market's lone $4 trillion company.
Nvidia won't report its fiscal second-quarter numbers for another four weeks. It should be another strong performance, even with the impact of restrictions for its H20 chips into China during the period. Analysts see revenue soaring 52% to $46.7 billion with earnings per share rising 47%. If this is Nvidia when there are headwinds to deal with, what will happen when it's business as usual?
As hot as Nvidia has been lately, DoorDash brings a strong one-year chart to the table. The leading third-party app for restaurant delivery has seen its shares soar 135% over the past 12 months, more than double Nvidia's haul in that time. It's a different story if you stretch out the timeline. DoorDash is up just 35% in the last five years. Nvidia is a 17-bagger.
Revenue growth is decelerating for the fifth consecutive year at DoorDash, but it's holding up a lot better than other pandemic-boosted businesses that saw their business prospects dry up when things returned to normal. The app operator's revenue rose 21% to $3 billion in the first quarter, fueled by an 18% jump in orders.
Bears would knock DoorDash when it was growing much faster for its lack of profitability, but that's no longer the case. DoorDash turned profitable last year, cranking out positive reported earnings in its last three quarters. DoorDash is now enjoying the merits of its model's scalability. The bottom line should outpace the top line for the next couple of years at this point.
Not every stock on Wood's shopping list on Monday is crushing the market. Intuitive Surgical is actually trading lower in 2025. It still has a good story to tell. Intuitive Surgical is a leader in robotic surgical arms that can help improve precision and recovery times in the procedures it has regulatory clearance to lend a hand in.
Unlike DoorDash, revenue is accelerating for the third year in a row. Its trailing earnings is also a new record. The stock isn't cheap despite its year-to-date pullback. Intuitive Surgical is fetching a forward earnings multiple north of $50. It revolutionized the way many surgical procedures get done aided by its da Vinci platform, but now it faces competitive threats to its lucrative model. The business is still in better shape than its recent stock activity.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash, Intuitive Surgical, and Nvidia. The Motley Fool has a disclosure policy.
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