Few big investors have generated as much controversy lately as Cathie Wood. A woman in a male-dominated field, Wood made her name by turning her flagship investment fund, ARK, into a multi-billion dollar giant – with high returns and plenty of glowing headlines while she did so.
It’s no secret that her fund has hit hard times. Wood went heavily into tech while building it up, and tech has been hurt badly in the market’s recent turndown. However, Wood reiterates her belief in disruptive tech stocks and their long-term potential, saying: “We do believe innovation is in the bargain basement territory… Our technology stocks are way undervalued relative to their potential… Give us five years, we’re running a deep value portfolio.”
Underlying Wood’s faith in her investment path is her belief that the main headwinds facing the market – and the tech sector in particular – are temporary. She puts most of the onus on the supply chain snarls, and says that once that works itself out, disruptive technology will move back toward a bullish trend.
Some Wall Street analysts would appear to agree with Wood on her stock choices. According to TipRanks’ database, three of her recent large buys are Buy-rated stocks with triple-digit upside potential – that is, a likelihood of doubling or more in the coming year. Let’s take a closer look.
Genius Sports (GENI)
We’ll start with Genius Sports, a tech firm that provides data management and integrity software services in the sports betting and media sector. Genius Sports works to improve the general quality of sports data for the benefit of leagues, teams, and fans, and has become a partner with more than 400 sports organizations, including such big names as the NFL, NCAA, NASCAR, and PGA.
While it has been in business since 2016, Genius Sports only entered the public markets in April of 2021, when it completed a SPAC merger with dMY Technology Group II. The GENI ticker hit the stock exchange on April 21, and the newly public company started out with a clean balance sheet: no debt, and $145 million in cash on hand. Since then, the stock has declined by 73%, with the lion’s share of the losses coming since this past November.
That month, GENI saw a sell-off after the Q3 earnings report was made public. That report, the firm’s third as a public entity, showed revenues at $69.1 million, up 70% year-over-year, and a solid lock on data services for the NFL, with 97% of the US sports market using NFL data through Genius. At the same time, EPS badly missed expectations, coming in at a 37-cent loss – where analysts had predicted a much lower EPS loss of 11 cents.
On a positive note, Genius Sports bumped up its estimates of full-year 2021 revenue to the range of $257 million to $262 million. While only a small increase from the previous guidance of $255 million to $260 million, the company’s rapid revenue growth puts the new guidance within reach. The company is scheduled to report Q4 and full-year 2021 data on March 11.
Cathie Wood clearly believes in Genius Sports. She picked up 2,229,757 shares in this stock during Q4 — a clear vote of confidence. This brings her total holding in GENI to more than 5.28 million shares, currently worth $28 million.
Wood isn’t the only GENI fan. Covering this stock for Craig-Hallum, 5-star analyst Ryan Sigdahl writes: “We think expectations are set appropriately (with potential upside), the company’s value-add to the industry is growing (real-time betting data, ad tech, personalized fan engagement, etc.), and its competitive moat is expanding. While the puzzle is still being put together, we think that creates an opportunity to accumulate shares in a company that has the ingredients to be a sports powerhouse.”
Standing squarely in the bull camp, Sigdahl rates GENI a Buy, and his $22 price target implies a robust upside of ~318% for the next 12 months. (To watch Sigdahl’s track record, click here)
Overall, Genius Sports holds a Strong Buy rating from the analyst consensus, based on 8 reviews that include 7 Buys and just a single Hold. The shares are selling for $5.27, and their $14.86 average price target suggests ~182% upside over the next 12 months. (See GENI stock forecast on TipRanks)
Archer Aviation (ACHR)
The next stock we’re looking at, Archer Aviation, operates in a tech niche that has true potential for disrupting travel patterns. The company is one of many that are working on urban air mobility, developing a short-haul, electrically-powered vertical take-off and landing (eVTOL) aircraft for use as a commuter air taxi in urban environments. Recent years have seen improvements in battery technology, lightweight materials, computer networking, and online interfacing that make short range urban air transit, using eVTOL platforms, a workable idea.
Archer is working on the Maker, a full-scale eVTOL prototype designed for safety and urban use. The Maker is capable of reaching 150 miles per hour, and has a noise rating at just 45 decibels, an important factor in urban areas, and it can land on any helipad or other flat landing site without need of a runway. The eVTOL approach is designed to alleviate ground traffic congestion problems in major cities. According to Morgan Stanley, the market for these new electric aircraft could reach as high as $1.5 trillion by 2040.
In September of last year, Archer raised capital through a SPAC transaction, combining with Atlas Crest Investment Corporation in a move that was closed on September 16. The merger brought the company $857.6 million in gross proceeds, and the ACHR ticker stared trading the next day. Since then, Archer’s stock has fallen by 69%.
While part of that fall can be attributed to Archer operating in a highly speculative niche with a product that is still in the development stage, the major headwind for the company has been on the legal front. Archer, specifically its employee Dr. Jing Xue, was accused of stealing trade secrets from Wisk, a competing company operating as a joint venture with Boeing. Earlier this month, the US Attorney’s office announced that it will not be bringing charges against Archer in connection with the accusation.
With the legal issues on their way to resolution, we can turn Cathie Wood’s investment in ACHR. She had an existing stake of 5.737 million shares in the company, and in the past quarter bought up an additional 5.568 million. This was a 98% increase to her holding; her stake in the company, 11,306,020 shares, is now worth $33.24 million.
Cantor analyst Andres Sheppard, like Wood, sees plenty to appreciate here. He writes: “We had previously noted that the overhang over the Wisk litigation was a contributing factor to the underperformance of the stock price. We believe that this outcome is favorable for ACHR and provides added confirmation that Wisk’s claims lack substantial factual basis. We view this is a positive catalyst and note that the perceived risk around Wisk’s litigation continues to lose traction.”
Sheppard also points out that the stock has been losing some serious weight because of a broader correction, noting: “So far YTD, we’ve seen a market downward correction across different sectors, which also includes eVTOL. This has also affected Archer’s peers… We believe that some of this correction is overdone, and that the current stock price does not reflect the intrinsic value of the company… ACHR’s cash position currently stands at ~$796M (as of 3Q21), and the company has guided total GAAP operating expense of ~$65-70M and non-GAAP operating expense of ~$35-40M.”
Overall, Sheppard sets an Overweight (i.e. Buy) rating on ACHR shares, and his $14 price target indicates potential for ~382% share appreciation in the year ahead. (To watch Sheppard’s track record, click here)
This stock holds a Moderate Buy rating in the Street’s consensus view, based on 3 recent reviews that include 2 Buys and 1 Hold. At $11.50, its average price target suggests ~296% one-year upside from the share price of $2.91. (See ACHR stock forecast on TipRanks)
For the last Wood pick, we’ll switch to the telecom industry. Mynaric is a designer and manufacturer of laser communications terminals and ground stations for airborne and spaceborne networks and applications. That sounds like a mouthful, but it means that Mynaric is in the business of connecting aircraft and satellites with their ground controllers. The company produces a range of laser optic communications terminals, for fast and reliable wireless data connections between land, air, and space.
In recent months, Mynaric has been moving to expand its footprint in the US. The company in November became a ‘strategic supplier’ with Northrop Grumman, and in December won a DARPA contract for the design of next-generation optical communications terminals.
This company, based in Munich, Germany, held its public stock offering in the US this past November. The MYNA ticker opened on NASDAQ at $16.50 per American Depositary Share (each ADS represented 4 regular share). The company sold 4 million ADSs, and the stock closed at $19.51 on its first day of US trading. Gross proceeds from the opening came to US$75.9 million. The stock has fallen 48% since entering the US markets.
The US stock sale attracted Cathie Wood, who opened a new position in MYNA stock – buying 393,413 shares. Her holding in Mynaric is now valued at $3.86 million.
Jefferies analyst Greg Konrad covers Mynaric, and sees the company is a solid position to keep growing. He writes: “Over the next four years, we estimate Mynaric can expend revenue to €261MM, a 100% CAGR. Growth is supported by the expansion of laser communications in both Space (750 Condor units in 2025 at a €160K ASP) and Air (900 Hawk units at a €120K ASP) to support the need for higher bandwidth. With multiple laser units on each satellite, initial contracts in hand, and a cycle with accelerated replacement needs, Mynaric is well positioned to take advantage with its differentiated offering.”
These comments support Konrad’s Buy rating, and his $23 price target indicates his confidence in a 12-month upside of ~134%. (To watch Konrad’s track record, click here)
While there are only 2 reviews on file for Mynaric, they both agree that this is a stock to buy – giving it a unanimous Moderate Buy rating. The shares are selling for $9.82 and have an average price target of $31.50, for a one-year upside potential of ~221%. (See MYNA stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.