Prediction: These two Cathie Wood stocks could crush the market by 2030

Is Cathie Wood a genius investor? The CEO of Ark Invest, an investment management firm, rose to prominence in the early days of the pandemic; Her firm’s actively managed ETFs performed well even as the rest of the market was moving in the wrong direction.

While her performance has been more varied since then, there’s no doubt that some of Wood’s picks look like long-term winners. Let’s consider two of those that could offer big returns by 2030: Regeneron Pharmaceuticals (REG -1.16%) and Shopify (STORE 0.36%).

1. Regeneron Pharmaceuticals

Regeneron has performed exceptionally well — and is up more than 200% — since January 2020. The biotech has done so despite multiple headwinds. One of the company’s biggest cash cows, Eylea, which treats wet age-related macular degeneration (an eye disease), faces risks from biosimilars.

In fact, several Eylea biosimilars were approved by the US Food and Drug Administration earlier this year. Beyond that, Eylea fought off competition from Rocheto Vabysmo since the latter’s approval in January 2022.

Revenues were also a bit flat due to pandemic issues. However, the drugmaker has fared better than well. Its COVID-19 antibody, REGEN-COV, generated significant sales early in the outbreak. And while it’s no longer licensed in the US, it was probably never a big part of Regeneron’s long-term plans.

Strong — but somewhat inconsistent — revenue from this product makes year-over-year comparisons unflattering for Regeneron, but it has allowed the company to generate sales it might not otherwise have. Overall, the biotech’s financial results were solid.

And as for Eylea, while some imagined that competition, biosimilar or otherwise, would dent its sales, Regeneron launched a high-dose formulation of the drug last year, which is helping its revenue stay in line. floating. In the second quarter, combined net sales from Eylea and Eylea HD increased 2% year-over-year to $1.53 billion. Regeneron’s Dupixent, an eczema therapy co-marketed with Sanoficontinues to be the biggest driver of growth.

Regeneron reported $1.1 billion in collaboration revenue from Sanofi in the second quarter, up 21 percent year over year. Regeneron’s total revenue was $3.55 billion, up 12% from the year-ago quarter. The Company may not deliver strong financial results every quarter; no corporation does.

Regeneron’s ability to manage challenges is what matters most. The biotech was able to mitigate Eylea losses and make the most of a bad situation during the pandemic by developing a COVID-19 antibody thanks to its innovative abilities.

And Dupixent is still awaiting a major U.S. label expansion to treat chronic obstructive pulmonary disease (COPD).

Shares of Regeneron rose after it announced strong results from Dupixent in a pivotal clinical trial in the treatment of COPD. No wonder. Some analysts predict that the indication could add about $3.5 billion in annual sales for the drug and help it reach its peak revenue of $20 billion — for reference, Dupixent’s sales last year reached a already impressive value of 11.6 billion dollars. In other words, eczema treatment should be a key growth driver through the end of the decade.

Beyond these, Regeneron has a rich pipeline of products, some of which will receive approval in the next few years. The drugmaker is working on a gene therapy for genetic deafness, for example. Regeneron’s solid core business, strong pipeline and proven track record inspire confidence. I would back the stock to beat S&P 500 until 2030.

2. Shopify

Shares of Shopify have been in freefall for about a year since the end of 2021. The company has faced slower-than-usual revenue growth, net losses and rising interest rates, factors that make investors to trade unprofitable high-growth companies for ones with more stable growth. and consistent earning potential.

Shopify has recovered somewhat — shares have doubled since the end of 2022 — thanks in part to several changes it made.

Buy data from YCharts.

Most importantly, it sold its logistics business to focus on its stronger, high-margin e-commerce operations. The move helped Shopify boost its margins and net income. In the second quarter, the company’s revenue rose 21% year over year (25% when the sale of its logistics unit is taken into account) to $2.04 billion. Shopify’s gross profit rose 25% year-over-year to $1 billion, for a gross margin of about 51.1%, up from the 49.3% reported in the year-ago period. It turned a net loss per share of $1.02 into net earnings per share of $0.13.

Free cash flow increased 243% to $333 million, and the free cash flow margin of 16% was much better than the 6% reported in the year-ago quarter.

Shopify still has a lot of potential for growth; Industry analysts project the e-commerce industry to grow rapidly by 2030. The company has built a solid brand name for what it does: providing merchants with a quick and easy way to build and customize an online storefront that can help sell their products through every major social media channel, integrate brick-and-mortar stores, and do so much more.

Now that it’s focused on its e-commerce business and offloading the logistics, Shopify could do even better. Shopify has performed in line with the S&P 500 since the start of 2020, but its improved business could allow it to do much better than that by the end of the decade.