When Cathie Wood speaks, investors listen. And with good reason. The founder of Ark Invest has successfully predicted stock market stars – one of her top interests is Tesla. Shares of the manufacturer of electric vehicles have risen by more than 400% in the past year. And Wood’s funds have achieved winning results – ARK’s five largest funds have each achieved a three-digit percentage profit over the past three years.
Here is some good news for all of us who want to follow the lead of this investment superstar: right now you can buy three of the biggest stocks in her Ark Genomic Revolution ETF on a bargain. Let’s take a look at the innovative players who will deliver excellent additions to any long-term healthcare portfolio.
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Teladoc
Ark Genomic Revolution’s biggest bet is on Teladoc Health (NYSE: TDOC). The telemedicine business, with 7.44%, is the share in the fund that is weighed the heaviest. Teladoc rose to a record high earlier this year. But here’s our buying opportunity: the stock has fallen by 34% since that point.
Teladoc offers virtual medical visits in more than 175 countries and has approximately 51.5 million members. Visits have increased in the triple digits over the past three quarters. As you can imagine, the pandemic last year gave an extra boost because people chose to stay home as much as possible. Revenue for the full year rose 98% year-on-year to more than $ 1 billion. And total visits increased by 156% to more than 10 million.
I expect Teladoc’s strength to continue after the pandemic. Even as the crisis eased in the later part of the year, revenue continued to rise. It rose 145% in the fourth quarter ending December 31st. Teladoc’s acquisition of Livongo adds to the growing field of digital management of chronic conditions. So Teladoc is still in the early stages of its growth story – a perfect time for investors to jump on board.
Regeneron
Regeneron Pharmaceutical Products (NASDAQ: RAIN) is ARK Genomic Revolution’s third largest position. The biotechnology company has eight commercialized products, including Eylea, the latest eye remedy. The product generated more than $ 4.9 billion in U.S. sales last year, an increase of 7% over 2019.
But what has really pushed Regeneron into the spotlight over the past few months are the antibodies to treat the mild to moderate cases of COVID-19. The U.S. Food and Drug Administration granted the company permission for emergency use at the end of November.
Prior to the authorization, Morningstar predicted that Regeneron could reach $ 6 billion in cocktail sales by 2021. So far, the adoption of the treatment has faced a challenge: it must be administered by infusion in a healthcare setting. But here’s good news: Regeneron is investigating the cocktail as a subcutaneous injection. The company recently announced positive results from two Phase 3 trials with subcutaneous delivery. This makes treatment easier and faster – for patients and healthcare facilities. Thus, the authorization of this delivery method can significantly increase the adoption.
Regeneron shares are trading at around 10.8 times the forecast. This is lower than the average of more than 16 in the past year. And it offers us a solid buying opportunity.
Vertex
Vertex Pharmaceutical Products (NASDAQ: VRTX) is the ARK Genomic Revolution’s seventh largest position. This biotechnology share yields more than 171% profit over five years. Last year, however, the shares went down after a candidate for alpha-1 antitryptic deficiency was discontinued – and they have been struggling ever since. (Vertex continues to develop a second candidate for this hereditary disease that affects the lungs and liver.)
Why the concern? After all, Vertex generates billions of dollars annually as a market leader in cystic fibrosis (CF). But some investors are worried about growth down the road. That’s why I’m not worried. Vertex expects its CF leadership to last until at least the late 2030s. Vertex’s CF business is still growing. The FDA approved the new treatment of Trikafta in 2019. The drug quickly became a lure – and sales growth continued as Vertex expanded its treatment in different countries and age groups.
As we look to the future, good news multiplies: Vertex and partner CRISPR Therapeutics progressing in their gene-editing therapy program for blood disorders. The ten patients treated so far have responded well and achieved their goals, such as remaining independent transfusions. In other news, the FDA recently granted Vertex highway directions for its candidate for type 1 diabetes cell therapy.
At present, Vertex is trading at around 19.7 times the earnings forecast. It has declined from more than 29 last summer. So this is a good time to pick up the shares of this Cathie Wood favorite as we consider today’s growth and potential products along the way.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! Questioning an investment thesis – even one of our own – helps us all to think critically about investments and to make decisions that help us become smarter, happier and richer.