Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought

Finding a bargain is a relative feat. For a growth investor like Cathie Wood, there might be deals in stocks that are slumping despite not yet being textbook cheap. She added to existing Ark positions in Archer Aviation (NYSE: ACHR), Space Exploration Technologies (NASDAQ: SPCX), and Meta Platforms (NASDAQ: META) on Monday.

Archer and SpaceX are now trading below their IPO pricing. Meta is faring a bit better than the recent slides at Archer and SpaceX, but the Facebook parent company is still trading 8% lower over the past year.

Let's take a closer look at the three potentially opportunistic purchases by Ark to kick off the new trading week.

Image source: Getty Images.

1. Archer Aviation

One of Monday's biggest winners was Archer Aviation stock. One of the leaders in the development of electric vertical takeoff and landing (eVTOL) aircraft saw its shares soar nearly 20% on its heaviest day of trading volume since late last year after introducing a new revenue stream.

Archer unveiled Thunder -- a Group 5 autonomous attack rotorcraft that it developed alongside Anduril. The Thunder pitch is that it will multiply the combat power of today's crewed attack, assault aircraft, and next-gen offerings.

The challenges for Archer's flagship Midnight eVTOL flying machines before going mainstream fall primarily on the limited flight range between charges and the tight weight controls. Thunder's lightning could be its stronger range and payload. Archer expects to announce the new platform's first commercial partners later this week.

A stock surging this week may not seem to vibe with bargain hunting, but zoom out. Even after Monday's pop, Archer's shares have plummeted 60% over the past year. Zoom out to the start of Archer's publicly traded life, and it has also surrendered more than half of its value since its IPO five summers ago.

Archer has had a series of wins lately, but the stock chart continues to tell a different story. It's landing potentially lucrative partnerships. The air taxi business that put it on the map is getting that much closer to a potential glow-up moment as the official provider of those services at the 2028 Olympic Games in Los Angeles.

Profitability is still another three to four years away, but top-line growth is expected to ramp up sharply in that time. Here are the current analyst revenue projections for Archer through the next few years:

• 2026: $10 million
• 2027: $86 million
• 2028: $481 million
• 2029: $1.43 billion

With a cash-rich balance sheet shaving its market cap nearly in half to arrive at an enterprise of just $2.3 billion, Archer can weather the deficits as its platform starts to grow as a business. Like its planes, its revenue should take off vertically soon.

Will the shares finally follow suit? Wood seems to think so.

2. SpaceX

Speaking of broken IPOs, SpaceX stock hit another all-time low on Monday. Granted, the shares have been in the market for only 25 trading days, but it's still quite the swoon. The shares have plummeted 47% from their intraday high on their third day of trading.

Ark Invest got in ahead of the IPO, and she has added to that position as the shares rose through the first few weeks of trading. It's not shocking that Wood is buying the dip. "Don't be surprised to see her pick up the pace of her purchases if SpaceX buckles below its IPO price later this summer," I wrote two weeks ago.

I didn't think it would happen this quickly, but the fund manager has a knack for capitalizing on pullbacks in her favorite holdings.

3. Meta Platforms

Meta isn't trading as far from its peak as Archer and SpaceX, but it's been a laggard among the "Magnificent Seven" stocks. The company behind social media sites Facebook, Instagram, WhatsApp, and Threads is trading near its 52-week low rather than its high, and shares have fallen 8% over the past year.

Business isn't slumping. Revenue is accelerating for the fourth consecutive year, with daily active users reaching a record 3.56 billion across its platforms. Unlike Archer and SpaceX, you can make an earnings-based valuation argument in favor of Meta. It's currently trading just shy of 20 times forward earnings.

Meta seems to be perpetually in a courtroom, and there's always the risk that the next generation of online users will favor a rival connectivity hub. It's a risk Wood is comfortable taking on behalf of her investors, and she does have a point.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.