Cathie Wood is recognized for her concentration on innovative technology. Through her firm, Ark Invest, she invests in technology stocks that have the potential for significant growth. ETFs Exchange-traded funds (ETFs), all of which target a particular area of interest.
It is common for Ark’s stocks to perform well in bullish markets, however, they are also associated with a high level of risk. Typically, investing in an ETF provides diversification across a range of stocks which helps to lower overall risk. Nevertheless, when the majority of stocks within the ETF are risky, this diversification may not hold true, making Cathie Wood’s ETFs unique in this regard.
Nevertheless, if Ark Invest’s ETFs are too innovative for your preference, you may still be interested in some of the investments they have chosen. Roku ( ROKU -0.51% ) and MercadoLibre ( MELI -0.92% ) There are two excellent candidates that have the potential to be included in a portfolio that could make someone a millionaire.
1. Roku: The ultimate in streaming convenience and affordability
Even though Roku stock has shown significant growth and increased efficiency, its value has been decreasing throughout the year. The market seems to be undervaluing the company at the moment, allowing investors to purchase it at a discounted price.
What are the advantages of using Roku?
Several companies initially produced more than needed when the pandemic began. These companies can be divided into two groups: those that successfully adjusted to the changing demand and those that did not. Roku belongs to the first group, as demonstrated in the second quarter of 2024.
Roku operates in two interconnected segments. One segment involves the sale of streaming hardware, making it the leading device vendor in the nation. Customers who purchase a device receive an account that grants them access to the Roku ecosystem, enabling them to stream Roku’s free channels as well as any subscribed channels that have a partnership with Roku. The second segment is its advertising business, which supports its free channels.
Only 15% of total sales are attributed to the hardware business. does not generate profit before deducting expenses However, it plays a crucial role in the overall framework by contributing to the expansion of the advertising sector. The general financial performance is getting better. In the second quarter, Roku produced $317.9 million in free cash flow, showing an increase from $100.8 million in the previous year. The net loss decreased from $108 million to $34 million.
Roku possesses significant potential for growth in the long run. With the increasing trend of viewers transitioning to streaming services, there is a growing demand for devices such as those offered by Roku to facilitate this shift. As an illustration, in the first quarter of 2024, there was a 23% rise in Roku streaming hours compared to the previous year, while traditional broadcast viewing declined by 13%, as reported by Nielsen.
Roku holds a leading position in the market due to its innovative and regularly updated devices, giving it a competitive advantage. Additionally, Roku is showcasing its capability to reduce expenses without hindering its expansion, which is essential for achieving profitable growth.
Roku’s stock has plummeted by 40% just within this year. Despite showing growth in sales for both its divisions and getting closer to achieving a net profit, the company continues to face challenges.
If Roku maintains its strong performance, which it is currently demonstrating, the stock is expected to increase in value over time. Investing in Roku stock now could potentially lead to significant profits that may help you achieve millionaire status.
MercadoLibre offers more than just online shopping.
In contrast to Roku, MercadoLibre is gaining the trust of investors due to its impressive expansion, solid profitability, and abundant potential. MercadoLibre’s stock has increased by approximately 20% this year. its e-commerce Fintech companies are thriving even in the face of worldwide inflation. Not only are they thriving, but their growth is also speeding up, reaching the highest levels seen since 2021 in the second quarter of 2024.
The e-commerce business saw a 20% year-over-year increase in Gross Merchandise Volume (GMV), or 83% when adjusted for currency fluctuations. In the fintech sector, the total payment volume surged by 36%. Revenue rose by 42% to reach $5.1 billion, while net income more than doubled to $531 million.
Despite catering to over 500 million individuals, MercadoLibre’s revenue accounts for only 0.3% of the total. Amazon While both companies are involved in more than just e-commerce, comparing them provides insight into the potential opportunity. Additionally, MercadoLibre operates in e-commerce markets that still have room for growth. When these factors are considered together, it creates the conditions for sustained and significant long-term growth, a trend that MercadoLibre has been experiencing.
The e-commerce platform of the company continues to attract new users, and these customers are becoming more engaged. In the fintech sector, the company now provides digital payment services, credit cards, investment products, and other offerings, and it is the leading platform in three out of its four biggest markets.
In addition to its e-commerce and fintech ventures, MercadoLibre is also taking advantage of the advertising sector. The company has expanded its presence in digital advertising and currently ranks as the third-largest digital advertiser in the areas where it operates.
Investors have seen significant returns from MercadoLibre, and there is still potential for further growth. Buying MercadoLibre stock now could boost your investment and potentially lead to becoming a millionaire in the future.
