Home Stock list Cathie Wood Buys These Biggest Growth Stocks — And Both Could Make You Rich Over Time

Cathie Wood Buys These Biggest Growth Stocks — And Both Could Make You Rich Over Time

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With the S&P500 falling more than 22% since the start of the year, some investors could find their resolve tested. It can be disconcerting to see your holdings do poorly, leaving you with little incentive to make additional investments.

But successful investors know that it’s in times like these that the seeds of future wealth can be sown. It’s something Cathie Wood surely acknowledges, gobbling up shares of two stocks that have the potential to prodigiously prosper in the future. Patient investors may want to follow suit and seed growth stocks rocket lab (RKLB 4.86%) and UiPath (PATH 0.47%) in their own wallets to reap the rewards down the line.

Take a flyer about a company flying in space

Rocket Lab first appeared in two of Wood’s exchange-traded funds (ETFs) in late September, and buying remained a priority in October. Last month the ARK Innovation ETF (ARKK -2.71%) and ARK Space Exploration & Innovation ETF (ARKX 1.25%) the two increased positions they initiated in September, adding a combined total of 919,767 shares.

As a leading space services company, Rocket Lab represents an out-of-this-world space investment. Having launched its Electron rocket 31 times over the past five years, Rocket Lab claims the second most frequently launched rocket – behind SpaceX – into space. In addition to this feat, Rocket Lab has also deployed 150 satellites into orbit.

Operating in the final frontier offers the company enormous potential – something Wood no doubt recognizes. In a recent investor presentation, Rocket Lab characterized its current Total Addressable Market (TAM) at over $380 billion, growing to $1 trillion by 2030.

Sufficient TAM is one thing, but it means little if the company fails to sell customers the value of its offerings. For Rocket Lab, however, that’s hardly the case. As of June 30, 2022, Rocket Lab had a backlog of $531.4 million, a growth of more than 190% from the backlog of $183.1 million it had at the end of September 2021.

Walk a bumpy road to wealth

After plunging nearly 82% in the first nine months of 2022, UiPath shares have largely fallen out of favor with investors who fear how it will perform in fiscal 2023. During its fourth quarter 2022 earnings report, management has forecast fiscal 2023 revenue and non-GAAP operating income of approximately $1.08 billion and zero to $10 million, respectively.

Management downgraded this outlook during the company’s recent second quarter 2023 earnings presentation, when it guided to revenue of approximately $1.005 billion and operating income not in line with guidance. GAAP. loss approximately $15 million.

This less auspicious view of 2023 hasn’t deterred Wood from being downright greedy with UiPath stocks. In the first 10 days of October, five of Wood’s ETFs combined to buy 903,034 UiPath shares.

Based on its current platform and offerings, UiPath estimates its TAM at $61.1 billion. But the company does not intend to stagnate. By expanding its platform to include low-code application platforms and business process management solutions, for example, UiPath believes it has the potential to add $32.1 billion to its TAM. In some context, UiPath recorded revenue of $892.3 million for fiscal year 2022.

It is worth considering the growth potential of the business, but it is equally important to recognize its achievements. UiPath, for example, has done well in securing and retaining its customers. The company determines this with its annualized renewal rate (ARR) metric, which it uses to gauge its “ability to acquire new subscriber customers and to maintain and grow our relationships with existing subscriber customers.” From Q4 2020 to Q2 2023, UiPath saw its ARR increase at a compound annual growth rate of 55%.

Something to remember

Watching the stock picks of the most famous investors, like Cathie Wood, is a popular pastime among those of us on Main Street. It is essential to recognize, however, that successful investing is more complex than simply buying the same stocks as Wood or other famous investors for that matter.

Still, Rocket Lab and UiPath are certainly compelling considerations for growth investors — possible portfolio additions worth exploring.