Cathie Wood was a busy shopper on Monday. The co-founder, CEO, and ace stock picker at Ark Invest added to 13 different existing positions across her aggressive growth exchange-traded funds, her busiest day of purchases in weeks. With the market sliding on Monday following what was already a rough week of trading, the sound that many heard as an alarm was a dinner bell for Wood.
Tesla(NASDAQ: TSLA), Advanced Micro Devices(NASDAQ: AMD), and Toast(NYSE: TOST) were some of her more interesting purchases on Monday. Let's take a closer look.
1. Tesla
Investors in the country's leading maker of electric cars probably figured that good times were here to stay when CEO Elon Musk wound up with ascending political clout following the November presidential election. Reality has been cruel. From full self driving to full self destruction, shares of Tesla have plummeted 55% since peaking at $488 in mid-December.
Tariffs and economic concerns are weighing on industry growth prospects. Specific to Tesla, it's not just sales in China -- its largest market outside of the U.S. -- sliding for five straight months on deteriorating brand appeal and its weakest shipments in that country in nearly three years. Even something as simple as Musk being vocal about the U.S. dropping out of NATO risks diminishing the automaker's already softening international sales. Will Tesla continue to drive feverishly in reverse, or is the sell-off a buying opportunity? Wood naturally sees the stock's correction as the latter.
Image source: Getty Images.
At least one analyst seems to agree that better days are ahead for Tesla shareholders. Morgan Stanley put out a bullish note recently. Analyst Adam Jonas concedes that year-to-date deliveries have been weak and that new car sales may decline this year. However, he sees several catalysts playing out this year that could improve the market's perception of the out-of-favor battleground stock. He feels that the recent sell-off sets aside Tesla's transformation into an artificial intelligence (AI) and robotics juggernaut.
On the valuation front, Tesla shares aren't cheap -- but they are cheaper. The stock has been falling faster than Wall Street's profit targets in the last three months. Tesla is now trading for 80 times this year's expected earnings and 60 times next year's analyst forecast.
2. Advanced Micro Devices
In terms of returns, Advanced Micro Devices was uncool before the rest the AI chip stocks cooled down with the recent market pullback. AMD traded lower in the otherwise buoyant 2024, and has shed more than a third of its value since the start of last year. The slide comes despite AMD recently posting its strongest top-line quarterly growth in two years.
AMD's revenue climbed 24% in last month's fourth-quarter report, and it did so despite double-digit percentage declines in its gaming and embedded segments. The AI revolution has resulted in a surge in demand for its data center processors, GPUs, and network accelerator cards. It added up to a 69% year-over-year surge in revenue for its data center segment, now accounting for more than half of its business.
AMD isn't done. Guidance for the quarter that ends later this month calls for top-line gains to accelerate to 30%, its headiest jump since the springtime of 2022. Despite AMD stepping on the gas pedal, analyst income estimates have been inching lower in recent months. The stock may still seem pricey on a trailing basis, but it's trading at a reasonable 15 times earnings and 4 times revenue if you look out to next year's Wall Street forecasts.
3. Toast
A growing number of good restaurant meals now end with a Toast reader showing up to close out your bill. A whopping 134,000 eatery locations are leaning on Toast, 26% more than those that were on the platform a year ago. Toast is a one-stop shop that helps restaurateurs do everything from managing inventory levels to running loyalty rewards programs to facilitating third-party delivery app orders.
It's become an essential tool to improve the industry's efficiency. Just an eighth of the country's restaurants are toasting to Toast. The ceiling is high, and now that Toast is profitable on a reported basis its scalability should start to pay off. Its annualized recurring run rate soared 34% in its latest quarter.
Toast is at the mercy of the restaurant industry, but it's gaining market share on improving margins. Wood added to her Toast stake on Monday despite the shares nearly doubling since the start of last year. Wood isn't just buying on the dips even in a softening market.
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Rick Munarriz has positions in Toast. The Motley Fool has positions in and recommends Advanced Micro Devices, Tesla, and Toast. The Motley Fool has a disclosure policy.
