Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought

Cathie Wood isn't having a great year. Just one of Ark Invest's six actively managed exchange-traded funds (ETFs) is beating the market, and its largest ETF is currently in the red year to date. However, the founder, CEO, and chief investment officer at Ark Invest keeps making moves.

Wood bought shares in Nvidia (NASDAQ: NVDA), Space Exploration Technologies (NASDAQ: SPCX), and Circle Internet Group (NYSE: CRCL) on Wednesday. Nvidia is trading just 10% away from May's all-time high, but the other two stocks have now shed more than half of their value from their earlier peaks. Why is Ark Invest adding to these three existing positions? Let's take a closer look.

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1. Nvidia

After briefly losing its title as the country's most valuable stock by market cap twice last month, Nvidia is back on top. The provider of AI and data center chips and other components has clawed its way back to be the lone company with a market cap above $5 trillion.

Nvidia stock has rallied 33% since its springtime low. It got a boost on Wednesday from an unlikely player. SpaceX -- which did not have a good trading day like Nvidia did -- announced during its poorly received earnings call that it will be exclusively using Nvidia chips for its space-based data centers. The news may not come as much of a surprise. If you are going to launch and operate data centers in space where switching costs would be massive, you may as well go with the proven industry leader.

Despite the stock's recent surge, Nvidia is probably cheaper than you think. You can buy the shares today for 24 times this year's earnings and just 17 times next fiscal year's profit target. With a long recent history of bottom-line beats and raised guidance, the results over the next year and a half could be higher than analysts currently expect. This would drive those reasonably attractive forward earnings multiples even lower.

The valuation gets even more compelling when you factor in how fast Nvidia is growing these days and its accelerating momentum. Wall Street pros see revenue and earnings per share soaring 96% and 98%, respectively, for the fiscal second quarter, which it will report later this month. It will be Nvidia's fourth consecutive quarter of accelerating top-line growth.

2. SpaceX

Momentum has been moving in the opposite direction for SpaceX stock since peaking shortly after its mid-June IPO. Its niche-leading Starlink satellite-based connectivity services and the promise of reusable rockets to lower launch costs initially mesmerized growth investors, but its lofty valuation has come under fire in recent weeks.

Now a broken IPO with a stock price less than half of its peak on its third day of trading, SpaceX's first quarter as a public company this week didn't provide relief. With a large amount of money committed to AI spending -- the same news that pleased Nvidia investors -- the next pressure point starts now. The first batch of post-IPO lockup expirations occurs on Thursday, with more than 900 million shares held by insiders now eligible for sale.

Will those insiders be less likely to sell now that the shares are trading below its $135 IPO price? Will they be more likely to sell, fearing that trading activity will continue to erode their fortunes? The market is about to find out. Wood likely sees the sell-off more as a long-term opportunity than a short-term concern.

3. Circle Internet Group

Finally, we have another broken IPO on Wood's shopping list. The issuer of stablecoin products and provider of blockchain solutions has fallen out of favor since peaking near $300 last summer. It has now fallen below its original IPO price of $69. One of last year's most volatile debutantes probably shouldn't be that wild.

The stablecoin market is supposed to be a safe haven of stability for digital currencies. More than 95% of Circle's top-line results last year came from interest income it collects on reserves held in the equivalent of short-term U.S. Treasury bills. That part of its business would actually benefit from the inevitable rise in interest rates, but the stock continues to suffer from last year's overabundance of bullish enthusiasm. Wood doesn't have a problem buying broken IPOs, with Circle and SpaceX among her largest purchases on Wednesday.

Rick Munarriz has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.