“It’s time to buy Dip”: Cathie Wood snags these 2 stocks under $10 – TipRanks | Jewelry Dukan

On Wednesday, the Fed hiked rates again, its third 75 basis point hike since June, and signaled there could be two more such hikes by the end of this year. Conventional wisdom holds that the Fed is doing the right thing and acting aggressively to counter inflation, which is raging at a 40-year high. But conventional wisdom is not always correct – and we can learn much by consulting with the adversaries.

Few top investors are more contrarian than Cathie Wood. The founder and manager of ARK Invest is known for going all-in on high-risk, high-potential sectors with a focus on disruptive technologies. Their strategy has propelled ARK Invest into a $60 billion behemoth — but some of their flagship funds have severely underperformed in recent months.

Of late, Wood has been making some waves by predicting an imminent bout of deflation rather than increasing inflation. Pointing to falling commodity prices, she notes, “Even the price of oil is down more than 35% from its peak, erasing most of the gain this year.”

Wood also notes some important historical differences between current conditions and the last wave of high inflation in the 1970s and early 1980s, saying: “The Fed seems to be reacting {sic]on COVID-related supply shocks that spanned 15 months, the same way Volcker fought inflation that has been brewing and building for 15 years. I wouldn’t be surprised if I see a significant policy shift in the next three to six months.”

In the meantime, let’s see where Wood is doubling down on his own investments. It “bought the dip” this month, picking up stocks that have seen a sharp drop in share price and are now selling for less than $10 a share.

Using the TipRanks database, we pulled up the details of two of their recent major purchases. Here they are, along with comments from Street’s analysts.

Ginkgo Bioworks stocks (DNA)

We’ll start with Ginkgo Bioworks, an interesting biotech company. This company is engaged in the production of designer microorganisms – living cells that can be used in a variety of scientific and industrial applications. The Company develops its cell lines through a proprietary platform and process that includes machine learning, biodiversity, DNA synthesis, organic fermentation, and software and automation. Ginkgo has built a reputation as the company of choice for researchers seeking high quality cellular technology.

Ginkgo went public through a SPAC transaction last September — it hit public markets on the 17th of the month — and since then the stock has fallen 76%. For the past year, the company has reported net losses in every quarter, although revenue has consistently beaten forecasts. The most recent financial statement for the second quarter of ’22 showed an operating loss of $647 million, a far larger loss than the $60 million for the same quarter last year. At the same time, revenue grew sharply year over year by 231% from $44 million to $145 million.

For investors, the important part of the company’s release was the forward guidance. Ginkgo expects to achieve 60 new cell programs in its foundry platform this year, a major draw for its customer base. The company is projecting full-year revenue of $425 million to $440 million, up from its prior guidance of 13% at mid-term.

All of this struck Cathie Wood. She bought into ginkgo through two of her mutual funds, ARK Innovation and ARK Genomic. In the former, she holds a total of 78.882 million shares of DNA, up from 5.26 million shares this month. At the latter, Wood added 3.57 million shares this month to bring her holdings to 27.439 million shares. In total, Wood’s interest in Ginkgo is over 106 million shares, valued at over $305 million at current valuations.

Wood is hardly the only bull in this stock. BTIG analyst Mark Massaro is also bullish on his assessment of the company’s future prospects.

“Looking ahead to 2H/22, management noted that foundry services revenue is likely to remain flat, although milestone payments are expected to be achieved in 2H/22 to allow Ginkgo to meet or exceed its 2022 foundry guidance. Ginkgo helps its customers harness biology and create products that can be superior in quality, less expensive and more sustainable than those used today, which we believe will include new nucleic acid vaccines, cell and gene therapies, and novel antibiotics over time will,” wrote Massaro.

“We believe that Ginkgo’s business model, consisting of the foundry and the downstream value portion, is solid and positioned to develop a broad range of businesses,” summarized Massaro.

Massaro puts these comments into numbers, giving DNA stock a price target of $6, suggesting a 113% one-year upside potential for the stock. He rates the stock as Buy. (To see Massaro’s track record, click here)

Other analysts disagree. With 4 buy ratings and no holds or sells, word on the street is that DNA is a strong buy. The average price target of $10.83 is more aggressive than Massaro’s and implies a 285% upside potential from the current share price of $2.81. (See DNA Stock Prediction on TipRanks)

TuSimple stocks (TSP)

The second stock we’ll look at is TuSimple Holdings, a company working on autonomous vehicles in the long-distance transportation industry. TuSimple’s goal is to connect AI-powered self-driving systems with long-distance freight haulage to create true autonomous truck driving – solving problems of efficiency, range and safety in the industry.

While TuSimple’s technology is not yet in commercial use, the company has built an Autonomous Freight Network (AFN) across the southern United States from Arizona to Florida. The company bases its network on strategically placed nodes and an evolving digital map and is currently working on its driver-out trial operation. In a major milestone last December, TuSimple was able to drive an articulated lorry in fully autonomous mode without a human crew on public roads.

In its financial report for the second quarter of 2022, TuSimple reported a net loss of 49 cents per share — its sixth straight such loss since its IPO. On the plus side, TuSimple’s losses have moderated over time; the previous year’s loss was 64 cents per share.

In a matter of crucial concern to investors, TuSimple was involved in a major safety investigation — including a lawsuit and government oversight — that resulted from a crash in April. A truck testing the autonomous driving system on the road, but with a human backup crew, unexpectedly staggered to the left and crashed into a concrete curb on I-10 in Tucson. The human crew could take control and avoid damage to other people or vehicles. TuSimple has traced the accident to human error, but questions remain — and are being investigated.

However, the accident didn’t stop Wood from increasing her stake. Over the past few weeks, Wood has purchased around 765,000 TSP shares through her ARK Innovation Fund, which now holds over 10.8 million shares of the company. In total, her fund has $76.96 million invested in the stock.

Ravi Shanker, a Morgan Stanley tech sector analyst, has also been following the stock since its IPO last year — and in his most recent note, he expressed encouragement at how management is handling the recent crash.

“We remain confident that LT’s story and TSP’s leadership position remain on track. We are encouraged by mgmt’s handling of the security incident and based on our understanding of the events, we are confident that this will not become a significant obstacle in their path to commercial adoption. We are also very encouraged by the improved costs and cash burn and ending FY22 with $950m in cash raising TSP at the current cash burn run rate of ~$75-80m/qtr TSP will be able to provide and bridge several quarters/years of liquidity beyond 2022 to commence commercial production,” Shanker wrote.

To that end, Shanker rates TuSimple stock as Overweight (ie, Buy), and its $35 price target implies an impressive one-year gain of a whopping 392%. (To see Shanker’s track record, click here)

While Shanker — and Wood — are very bullish on this stock, Wall Street in general is more divided. The bulls are slightly ahead with 3 buys versus 2 holds received in the last three months. Nevertheless, the average target price of $15.19 suggests a ~125% 1-year increase from the current trading price of $6.76. (See TSP Stock Prediction on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important that you do your own analysis before making any investment.

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