3 stocks she just bought

When the market is flooding, Cathie Wood is there to try to catch the drops in a bucket. The co-founder, CEO and stock picker at Ark Invest had one of her busiest trading days on Monday, as the market was in freefall. She added to two dozen of her existing positions, taking advantage of lower entry points. Will her strategy work?

Wood kicked off the new trading week by increasing his stakes in Amazon.com (NASDAQ: AMZN), Tesla Motors (NASDAQ: TSLA)And Time (NASDAQ: TEM)Stocks fell 2-4% on Monday as part of the broader market slide. Let’s take a closer look.

1. Amazon

The 4% drop in Amazon’s stock, the world’s largest online retailer, on Monday wasn’t pleasant for shareholders, but the past few weeks haven’t been easy, either. Amazon is now down 20% since hitting an all-time high last month.

The biggest drop came on Friday last week. Amazon shares fell 9% after the company released poorly received financial resultsEarnings per share nearly doubled to $1.26 in the second quarter, well above the $1.03 analysts were targeting. There wasn’t much of a surprise behind that surprise, as Amazon has beaten Wall Street’s earnings targets by double-digit percentages in each of the past four quarters. Unfortunately for Amazon, that was about the only good news in last week’s update.

The group’s revenue rose 10% to $148 billion in the three months to June, slightly below analysts’ expectations. A 19% rise in its dynamic Amazon Web Services segment was tempered by a 9% rise in North American e-commerce sales and a 7% increase in its smaller international business.

Amazon’s outlook is also a sore point for the market. The company expects its net sales to rise 8% to 11% in the third quarter. The midpoint is below the nearly 11% year-over-year increase that Wall Street had been targeting. Amazon also sees its operating income growth slowing significantly from previous quarters.

The stock is interesting in this regard. Revenue growth is slowing. This is shaping up to be the third straight year of sub-12% revenue growth, the worst three years in its 27-year trading history. Amazon is feeling pretty mortal now. It’s facing fast-growing Chinese e-commerce players, and brick-and-mortar chains are getting smarter about driving digital sales. A potential recession won’t help, either.

Against this backdrop, earnings forecasts continue to climb. Amazon’s falling price puts it at 34 times this year’s forecast earnings and less than 28 times next year’s estimates. Those are high multiples for a company e-commerce business Net sales are growing at a much slower and slower pace. However, Amazon deserves a high market multiple given its market dominance and high-margin AWS business.

The story continues

2. Tesla Motors

Tesla is the largest holding in Wood’s largest fund, accounting for 14% of the fund’s assets. Ark Innovation Exchange Traded Fund (NYSEMKT: ARKK)With Tesla shares down 20% year-to-date, they play a role in why Ark Innovation…