3 Stocks Cathie Wood Is Buying That Should Be on Your List Too

I wish I could say there was some sort of poetic intent in the fact that all three of these companies’ names begin with “T,” but I’d be lying. The reality is that Teradyne (NASDAQ: TER), Tesla (NASDAQ: TSLA), and Trimble (NASDAQ: TRMB) are long-term favorites of Cathie Wood, and her exchange-traded funds (ETFs) have bought more shares of all of them recently. That’s my reason for looking at them now, and it’s a good one because all three are highly attractive growth stocks with long-term earnings tailwinds.

Teradyne for its exposure to semiconductors

If you follow Wood into Teradyne, you will have to accept you are buying into a highly cyclical stock. That comes with investing in a company whose primary activity (accounting for around two-thirds of revenue in 2022) is designing, manufacturing, and selling semiconductor testing equipment. Taiwan Semiconductor Manufacturing and Qualcomm (two of the three largest semiconductor companies in the world) are significant customers of Teradyne.

Its solutions help its customers improve production quality, performance, and yield while reducing the time to market for semiconductor devices. Its other business includes system tests (15% of 2022 revenue), robotics (13%) and wireless testing systems (6%).

These are all attractive end markets over the long term, not least as semiconductors become increasingly integrated into new products. As such, Teradyne will surely recover from the trough it experienced in 2023, which was caused by a slowdown in spending on consumer electronics. Indeed, Wall Street analysts forecast that Teradyne’s revenue will grow by 11% in 2024 after a 15% slump in 2023.

That’s fair enough, but it’s still hard to argue that Teradyne is a value stock right now, even if it’s at a cyclical low. For example, now that the lockdown-initiated boom in consumer electronics spending is over, Teradyne appears to have reverted to its long-term revenue trend line, with an annualized growth rate of…