5 Best Performing Stocks of the Top ETF of November

ARK Innovation ETF ARKK, which provides thematic multi-cap exposure to innovation across sectors, has gained 35.2%, becoming the best-performing ETF of November.

The technology sector roared back last month and dominated the stock market rally once again. This surge is primarily driven by a decline in yields on optimism that the Fed’s aggressive interest rate hike campaign might be nearing an end. Yields on U.S. Treasuries saw the biggest monthly drop since 2008, leading to risk-on trade. High expectations for artificial intelligence continued to add to the strength.

Most stocks in ARKK’s portfolio delivered strong returns in November. Coinbase COIN, CRISPR Therapeutics AG CRSP, Block SQ, Twist Bioscience Corporation TWST and Roku ROKU led the way.

The growing optimism that the Fed may halt rate hikes and avert a recession has renewed investor interest in major technology and internet stocks. According to the CME FedWatch Tool, market participants expect a 95.6% probability that the central bank will keep interest rates at current levels through its January meeting. There is a more than 50% probability of a rate cut of at least 25 bps by May.

As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for initiatives when interest rates are low. In particular, companies like Microsoft Corp. MSFT and Nvidia Corp. NVDA, which are at the forefront of artificial intelligence (AI) evolution, have been the biggest contributors.

Hedge funds’ upsurge in big tech investments further led to the sector’s rally. Per the latest regulatory filing, several hedge funds expanded their bets on big technology stocks, including Amazon AMZN, Microsoft and Meta Platforms META (read: Billionaires Bullish on Big Tech: ETFs in Focus).

The expansion of AI applications holds the promise of ushering in opportunities for growth within the sector. The global digital shift has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping, thereby bolstering strength in the sector. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology will continue to fuel a rally.

Further, the tech titans have strong balance sheets, durable revenue streams and robust profit margins, making them attractive investments. They are better positioned to withstand a possible economic downturn and have demonstrated improved cost discipline.

Let’s take a closer look at the fundamentals of ARKK.

ARKK in Focus

ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of products or services, technological improvements, and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. In total, the fund holds 33 securities in its basket, with some concentration on the top firms (read: 5 Sector ETFs That Beat the Market in November).

ARK Innovation ETF has gathered $8.3 billion in its asset base and charges 75 bps in fees per year from investors. It trades in an average daily volume of 16.6 million shares.

Best-Performing Stocks of ARKK

Coinbase is the largest U.S. cryptocurrency exchange, trading some 50 different digital assets. The stock has soared 47.4% in a month and accounts for an 11.3% share in the ETF.

Coinbase has an estimated earnings growth of 91.7% this year. It currently has a Zacks Rank #2 (Buy) and a Momentum Score of B. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

CRISPR Therapeutics is a leading gene editing company focused on developing CRISPR/Cas9-based therapeutics. The company is rapidly leveraging its CRISPR/Cas9 gene-editing platform to make therapies for the treatment of hemoglobinopathies, cancer, diabetes and other diseases. The stock gained 44.5% in November and accounts for a 4.7% share in the ETF.

CRISPR Therapeutics has an estimated earnings growth rate of 59.7% for this year. It presently has a Zacks Rank #2 and a Momentum Score of A.

Block, formerly known as Square, offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers start, run and grow their businesses. The stock has gained 44.2% last month and accounts for a 6% share in the ETF.

Block has an estimated earnings growth of 90% this year. It currently has a Zacks Rank #2 and a Momentum Score of B (read: Tech Turns Hot, ETFs Touch New 52-Week Highs).

Twist Bioscience operates as a biotechnology company. It offers synthetic DNA-based products, including synthetic genes, tools for sample preparation, antibody libraries for drug discovery and development, and DNA as a digital data storage medium. It rallied 38.9% in November and makes up for 1.1% of TWST’s portfolio.

Twist Bioscience has an estimated earnings growth rate of 16.02% for the fiscal year ending September 2024 and a Zacks Rank #3 (Hold) at present. It has a solid Momentum Score of A.

Roku is the leading TV streaming platform provider in the United States based on hours streamed. The stock has gained 33.5% last month and accounted for 9.1% in the fund’s basket.

Roku’s earnings are expected to decline 38.4% for this year. It currently has a Zacks Rank #3 and a solid Growth Score of B.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Block, Inc. (SQ) : Free Stock Analysis Report

ARK Innovation ETF (ARKK): ETF Research Reports

CRISPR Therapeutics AG (CRSP) : Free Stock Analysis Report

Roku, Inc. (ROKU) : Free Stock Analysis Report