Cathie Wood’s ARK Genomic Revolution ETF (NYSEMKT:ARKG) focuses on investing in companies that could profit from using genomics to improve the quality of human life. The ETF currently owns positions in 60 individual stocks. In this Motley Fool Live video recorded on May 26, Motley Fool contributors Keith Speights and Brian Orelli discuss which stocks appear to be the best picks among the top holdings in the ARK Genomic Revolution ETF.
Keith Speights: A lot of investors follow Cathie Wood. Her ARK ETFs have been some of the best performing ETFs around for several years now. Some of those ETFs haven’t performed quite as well this year, but over the last five years or so, they’ve been big winners.
Let’s talk about one of Cathie Wood’s ETFs. The Ark Genomic Revolution ETF, which the ticker there is ARKG, A-R-K-G. This is a healthcare ETF. Which do you think is the best stock in this Cathy Wood ETF to buy right now and why?
Brian Orelli: Looking through the list, I think I only own one of them, Vertex Pharmaceuticals (NASDAQ:VRTX), ticker there is V-R-T-X. I think it’s a great value right now, it’s well off its 52-week high, mostly due to one clinical trial failure for phase 1 or 2 study, but they have a backup compound there for that same disease.
The reason for the decline was probably not necessary. That’s why I think it’s a good value right now. They definitely need to find their next growth driver beyond cystic fibrosis, but they’re generating a lot of cash from the cystic fibrosis drugs that are multi-billion dollar franchises. I think they’ll have plenty of opportunity to grow from here.
There are two that are on my watch list. Regeneron (NASDAQ:REGN), ticker there is R-E-G-N. It’s always looked expensive, but I noticed it’s fallen back substantially from its 2020 highs, and so it’s looking more appealing at this valuation. Then Twist Bioscience (NASDAQ:TWST) is also on my watch list. They’re definitely not going to win any awards on their valuation, but it’s an interesting company that’s focused on creating DNA, so they are used mostly for researchers and biotech companies, they can do it substantially cheaper.
Then they’re expanding into other areas, use the DNA to then create antibodies. Then the biggest potential is to use DNA to actually store information, basically like a computer, the DNA is four different basis, and so you can use those four different basis to translate the computer data information into actual DNA. You can just put it in the freezer. Then if you need to read that DNA, you just come out and sequence that [inaudible] the DNA.
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