Cathie Wood is the founder and CEO of the world’s largest actively traded ETF management company – Ark Investment Management LLC. With more than $50 billion in assets under management, Wood is one of the most profitable institutional investors, known for her interest in companies focused on disruptive innovation.
Wood’s investment strategy involves handpicking shares of companies that have the potential to revolutionize their industries altogether. Wood’s investment bets last year led to a 10-fold growth in the net assets of Ark Investment, making it one of the most profitable ETF companies globally. Moreover, the majority of the ETFs delivered triple digit gains in 2020.
Wood is currently betting on Lockheed Martin Corporation (LMT) and Deere & Company (DE) as she expects them to be industry movers in the near term. With solid financials and growth potential, it could be wise to follow Wood and add these stocks to your portfolio.
Lockheed Martin Corporation (LMT)
LMT is a security and aerospace company that engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. The company operates through four segments — Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. It also provides management, engineering, technical, scientific, logistics, and information services.
Investing in LMT through ARK Autonomous Technology & Robotics ETF (ARKQ) and ARK Space Exploration & Innovation ETF (ARKX) ETFs, WOOD has a combined holding of 289,571 shares, which translates to a 0.25% weighting. LMT is #9 in the ARKQ’s top holdings.
The U.S. Space Force has launched SpaceX’s Falcon 9 rocket with upgraded next-generation satellite GPS III-SV05 designed by LMT to orbit on June 17, 2021. Adding GPS III SV-5 as the 24th Military Code signal-enabled satellite will bring the other satellites in the GPS satellite constellation for allowing U.S. military force the global access to the jam-resistant signal and increased accuracy. LMT’s contribution toward Space Force’s Positioning, Navigation, and Timing Mission is expected to nurture their long-term partnership.
On June 2, NASA selected the VERITAS and DAVINCI+ missions for its Discovery Program to study Venus’ dense atmosphere, topography, and geologic processes in great depth. Planning to launch around the 2028-2030 timeframe, LMT will build and operate both the spacecrafts. NASA’s return to study Venus’ geology and atmosphere after more than three decades with DAVINCI+ and VERITAS will enable scientists to better understand the existence of past life and the greenhouse gas effect, thus providing clues about Earth’s own future. It will also help inform future missions to the planet. Both LMT and NASA have been working together for over 50 years, and are looking forward to their long-term partnership.
LMT’s net sales came in at $16.26 billion for the fiscal first quarter that ended March 28, 2021, which represents a 3.9% year-over-year improvement. The company’s total consolidated operating profit increased 2.8% year-over-year to $2.18 billion. Its net earnings have been reported at $1.84 billion for the quarter, up 7% from the prior-year period. LMT’s EPS increased 7.9% year-over-year to $6.56.
The consensus EPS estimate of $6.52 for the current quarter, ending June 30, 2021, represents a 12.7% year-over-year improvement. It has surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $16.92 billion for the current quarter, represents a 4.3% rise from the prior-year period. The stock’s EPS is expected to grow at a 5.1% rate per annum over the next five years. LMT has climbed 9.1% over the past three months to close yesterday’s trading session at $382.90.
LMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which equates to a Buy rating in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value, Stability, Quality, and Sentiment. To see additional grades for LMT (Growth and Momentum), click here.
LMT is ranked #6 out of 63 stocks in the Air/Defense Services industry.
Deere & Company (DE)
DE manufactures and distributes equipment used in agriculture, construction, forestry, and turf care. It also offers wholesale financing to dealers of the equipment, extended equipment warranties, and retail revolving charge accounts. Wood has been investing in DE through the ARKQ and ARKX ETFs. She has a combined holding of 246,622 shares of DE, which translates to a 0.19% weighting. DE is the #holdings in ARKQ.
In an announcement on May 18, 2021, DE featured RENCRAFT Super Hard Coat polycarbonate windows on its G-Series harvesters and forwarders, which are designed to withstand external wear, enhance scratch resistance, and withstand chemicals and cleaning solutions, while also enhancing optic quality. The upgraded windows are 50% thicker than before, and makes the cab better insulated, resulting in a quieter environment on the job site. DE hopes to witness good sales in the near-term.
On May 10, DE added new technology and transmission options and more top-end horsepower to its 5M Series Tractor lineup and introduced a new 125-horsepower tractor to the lineup. Its integrated AutoTrac guidance helps operators reduce inputs, such as fuel, seed, and fertilizer, by minimizing overlap in straight line applications in fields, thus reducing costs significantly. The company expects the revamped lineup to generate robust sales.
For its fiscal second quarter, which ended on May 2, 2021, DE’s total net sales and revenues were $12.06 billion, which represents a 30.3% year-over-year improvement. The company’s total operating profit is reported at $2.44 billion for the quarter, up 152.7% from the prior-year period. While its net income increased 168.8% year-over-year to $1.79 billion, its EPS increased 169.2% year-over-year to $5.68.
Analysts expect DE’s EPS to improve 75.4% year-over-year for the current quarter ending July 30, 2021 to $4.51. The stock surpassed consensus EPS estimates in each of the trailing four quarters. And its consensus revenue estimate of $10.30 billion for the current quarter represents a 31.1% rise on a year-over-year basis. Analysts expect the stock’s EPS to grow 37.6% per annum over the next five years. DE has gained 111.2% over the past year and closed yesterday’s trading session at $328.38.
DE’s POWR Ratings reflect this promising outlook. The stock has an overall grade of B, which equates to a Buy rating in our POWR Ratings system.
The stock has a B grade for Sentiment. In addition to the POWR Ratings grades we’ve just highlighted, one can see DE’s grades for Growth, Value, Momentum, Stability and Quality here.
Out of 84 stocks in the A-rated Industrial – Machinery industry, DE is ranked #26.
Click here to check out our Industrial Sector Report for 2021
LMT shares were trading at $380.20 per share on Friday afternoon, down $2.70 (-0.71%). Year-to-date, LMT has gained 8.66%, versus a 11.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…
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