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Katie Wood has become a shining star on the news yesterday. While its Ark Invest exchange-traded funds (ETFs) doubled investor money in 2020, they have cooled significantly since then. The fund is down 59% over the past 12 months and 18% over the past three years, but Wood is still a sharp Wall Street guru with a 10-year annualized return of nearly 60%, indicating that how well did he work before? bull market.

However, no one is having a really good year this year, not even him S&P 500: In 2022 it decreased by 17%. But here are three stocks owned by Cathy Wood’s ETFs that could outperform the broad market index over the next decade.

Image source: Getty Images.

Put

Wood bought and sold Put (DE: 0.30%) numerous times over the past few years, most recently selling 5,800 shares last month. He still owns 164,000 shares worth about $71 million at current prices, so don’t read too much into his stock holding.

Business is booming for Deere with strong demand driving up production based on domestic sales reports. As a result, the stock is up 24% year-to-date. Brent Norwood, director of investor relations, told analysts on Deere’s fiscal fourth-quarter earnings call. “In fact, we ended up producing more in each subsequent quarter throughout the year, with the fourth quarter being the high point.”

Quarter in fiscal year 2022

Revenues

% Raise YY
Q1: $9.56 billion 5%
Q2: $13.37 billion 11%
Q3: $14.10 billion 22%
Q4: $15.54 billion 37%

Data Source: Company’s SEC filings.

Deere is benefiting from inflated agricultural commodity prices, which are significantly higher than last year, due in large part to Russia’s incursion into Ukraine, a significant producer of Europe’s wheat supply. Higher commodity costs should help increase the profitability of farmers who will spend to replace old equipment.

Staple grains will be needed for several growing seasons to ease tight supplies, while equipment dealer inventories are also low. That’s why Deere is looking for a repeat of its performance in 2023, with sales in the large agriculture segment up 15% to 20%, or nearly $20 billion, and construction and forestry up about 10%, or nearly $14 billion.

Trading at 14 times next year’s earnings, there’s plenty of room for Deere stock to outperform the broader stock market.

Shopify:

the shares of Shopify: (SHOP: -0.82%) they’ve gone in a different direction than Deere, losing nearly 74% of their value this year, and are a good reason why Wood’s portfolios have suffered. The e-commerce platform provider is currently Wood’s seventh largest holding.

Woman with credit card and tablet.

Image source: Getty Images.

Shopify has become more than a point-of-sale and is now a vertically integrated service provider for small and medium-sized businesses, offering them payment options, small business loans and the ability to sell to hundreds of millions of consumers. on some major online platforms such as TikTok, Facebook, Twitter and YouTube.

The e-commerce platform is also attracting the attention of enterprise class businesses. While the meteoric growth of the early boom is unlikely to be repeated, Shopify’s 2021 annual sales of about $4.7 billion represent the company’s enormous potential.

Shopify doesn’t charge its app developers any fees on the first $1 million in revenue they generate from their apps, so they’re incentivized to build for the platform. Shopify also has a critical mass of customers that will grow as creative options become available. More customers equals more app developers wanting to be on the platform, prompting more customers to sign up.

Look for Shopify to easily beat the market within three to five years. A recession can be a short-term obstacle, but bear markets are usually measured in months and bull markets in years. I’m bullish on Shopify’s long-term growth.

Nvidia:

Chipmaker: Nvidia: (NVDA: -2.25%) never had the same impact on Wood’s portfolio as Shopify, and the investing guru has sold his positions in the company at times. Today, however, he owns more than half a million shares.

Nvidia’s recent woes have been exacerbated by events in the cryptocurrency world, notably; Ethereum: evolved from a proof-of-work validation system to a proof-of-stake system where stakeholders validate transactions. Nvidia’s powerful chips were the driving force behind the authentication process in the previous system, but are not necessary in the current arrangement.

The company faltered again with the launch of its new 4000 series graphics cards, having to drop one model and cut the price of others to gain traction. But Nvidia remains the undisputed leader in the discrete graphics processing unit market, with an 88% share as of Q3 2022.

The gaming segment has long been Nvidia’s bread and butter, but it has been in decline in recent periods, with revenue falling to $1.57 billion in the third quarter, down 51 percent year over year. It was replaced by Nvidia’s data center business, which represented nearly two-thirds of total revenue, or $3.83 billion, up 30.5% from last year. That segment of the data center opens up significant growth potential, especially as the additional server recycling market enters next year.

Along with its small but growing automotive business, healthcare circles, robotics and artificial intelligence factories, there are plenty of levers for Nvidia to pull to make the semiconductor stock a winning bet once again. It projects a total addressable market opportunity of $1 trillion across its many businesses, a valuation it just might reach for itself within the next decade.

Rich Duprey has no position in any of the listed stocks. The Motley Fool has positions in and recommends Ethereum, Nvidia and Shopify. The Motley Fool recommends Deere and has the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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