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Drive the crypto boom with these 3 stocks
Around 15% of the American public owns some form of cryptocurrency – and a large part of that group has jumped on the bandwagon in the past two years. The digital currencies – Bitcoin is the most famous, but there are many others – offer users a number of advantages based on their blockchain technology. First, the crypto coins are safe – as a digital technology, blockchain is known to be hard to break. Second, the coins have the main characteristic of any store of value: scarcity. There is a mathematical limit to how many Bitcoin, for example, will ever exist – and that limit is what gives them their value. People want safe online currency, are willing to pay for it, and relatively rare compared to traditional fiat currencies, crypto coins offer both of these qualities. The result has been a boom over the past few years as investors began to get serious about the crypto sector. Of course, every digital currency needs a number of services in order to be usable. Financial companies to support it and payment servers to process transactions, to name a few. Other companies and important business people – Elon Musk comes to mind immediately – will invest heavily in them. All of this creates a landscape where investors can benefit from crypto without ever buying an actual coin. You can invest in companies that are ready to lead the cryptocurrency boom into higher profits. How big is crypto? The market for it exceeded $ 2 trillion earlier this month, a number that is difficult to understand. As usual, we turned to the TipRanks platform to better understand the stock landscape when it comes to crypto. We pinpointed three stocks from different sectors that some of the top analysts on the street claim are expected to generate crypto-burdened profits. Let’s dive in. Silvergate Capital (SI) We start in the financial world, aptly when we talk about a new financial asset like crypto. Silvergate Capital is a California chartered commercial bank providing financial services and infrastructure to clients in the digital currency industry. Silvergate has been in the financial industry for over three decades and has made a profit every year for the past 21 years. Silvergate entered digital currency in 2013 and was actively tracking customers in digital currency. Today the company has over 1,100 customers in this area. In March of this year, Silvergate expanded its digital currency services and used a custody service to hold Bitcoin as collateral for commercial loans in US dollars. The service gives large Bitcoin holders the ability to access liquid capital without selling the underlying cryptocurrency. Silvergate holds the Bitcoin collateral through Coinbase and Fidelity Digital Assets. In its most recent financial release for the first quarter of 21, Silvergate reported earnings per share of 55 cents per share, up 14% and better than industry estimates, up 139% year-over-year. Silvergate supported earnings growth, posting customer growth of 29% year over year. Digital currency deposits rose from $ 5 billion at the end of December to $ 6.8 billion at the end of March. The company’s rapid growth is also reflected in its stock value, which has risen an astonishing 582% over the past 12 months. Impressed by Silvergate’s growth in the digital currency banking business, 5-star analyst Joseph Vafi of Canaccord Genuity writes: “Silvergate made another shipment in the first quarter, reflecting a further increase in deposits of almost 40% over the previous quarter 130% is highlighted q increase in Q4. This impressive deposit growth was due to similarly strong growth in demand for use of the Silvergate Exchange Network (SEN) as institutional interest in Bitcoin continues to accelerate. Equally important are the effects of the two strategic contracts signed with Fidelity and Coinbase in the first quarter. From our point of view, it is clear that it is not only developing into an important financial services company in the entire institutional trading of cryptocurrencies, but that SI is now becoming the most important partner for cryptocurrency administrators who want to offer margin lending. It is important that Silvergate has a key competitive advantage in the allocation of crypto margins due to its underlying banking charter, which offers very low cost of capital by taking up interest-free customer deposits. “Vafi, who is in the top 100 Wall Streets analysts, is buying SI stock and its price target of $ 150 suggests the stock has room for 36% growth this year. (To view Vafi’s track record, click here.) Canaccord’s Vafi is not an outlier in his optimistic views. Silvergate has 5 recent ratings, including 4 buys versus a single hold, for a strong buy consensus rating. The share price of the stock is $ 107.22, and the average target price of $ 158 implies a 45% uptrend – even more bullish than Vafi allows – for the year ahead. (See Silvergate’s stock analysis at TipRanks.) PayPal Holdings, Inc. (PYPL) While Silvergate is barely a household name, PayPal has become one. The company is a leader in online payments processing, a booming industry in its own right, and its revenue rose from $ 17.7 billion in 2019 to $ 21.4 billion in 2020. The company posted its second, third Q4 and Q4 sequential revenue increases Last year, EPS hit $ 1 in the fourth quarter, up from 43 cents in the first quarter last year. That PayPal grew during the pandemic isn’t surprising. We all know that e-commerce has been booming over the past year and has benefited from the social blocking guidelines. Online payment processors are required for e-commerce. PayPal is a leader in the industry with over 377 million active accounts, processing 4.4 billion payment transactions for a total of $ 277 billion in payments. In a key development for the company, PayPal announced in April that its Venmo mobile payment app will now allow users to buy, sell, and hold four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. According to a survey, 30% of Venmo users are already involved with crypto. This step makes their transactions more convenient and opens up an easy way for Venmos to crypto for 70 million customers. BTIG analyst Mark Palmer pointed out a key factor in PayPal’s new Venmo feature when he wrote, “The move marked the first time consumers could use crypto to make purchases from a large number of merchants. The crypto option is now available in the US at more than half of PYPL’s 29mm dealers. The company says more will be added soon. “Palmer believes this move towards crypto will be a net positive for PayPal and he supports it with a buy rating and a price target of $ 345, implying a year-long move up of 31%. (To see Palmer’s track record, click here.) Wall Street’s in line with Palmer is evident from the consensus rating for strong stocks, backed by new buy ratings less than 29 recent. These outweigh the 4 holds that were also set here. PYPL stock trades for $ 262.29, and its average price target of $ 310.68 suggests the stock has room for 18% growth this year. (See PayPal’s stock analysis at TipRanks.) CleanSpark (CLSK) After all, CleanSpark is both a software company and a clean energy company. That makes more sense than it appears at first glance – the CleanSpark software products are used to control microgrid and distributed energy systems. These systems allow users to go offline and log out of traditional power distribution for cleaner green energy sources. CleanSpark offers the control software for these systems. Earlier this year, CleanSpark took some bold moves that made waves in its own industry and in the crypto industry. In March, the company launched an offering of public shares – more than 9 million shares of common stock – at $ 22 each, raising more than $ 200 million before expenses. That alone was noticed by the investors. In addition, the company began using the funds to buy up more Bitcoin mining rigs. These are the computer systems through which new bitcoins are generated. They use enormous amounts of electricity, give off a lot of heat – and CleanSpark has invested heavily, not just in the computer-assisted mining equipment that is slowly producing new bitcoins, but also in the clean energy infrastructure to make the company’s mining location in Atlanta 95% carbon free. The company’s recent investment in Bitcoin mining will take shape later this year. Finally, in April, CleanSpark announced it had signed contracts for an additional 22,680 bitcoin miners. With all new equipment installed and operational, CleanSpark expects bitcoin mining production to increase to more than 3.2 EH / s.In the quarter ended March 31, CleanSpark produced 144 bitcoins and has totaled since mining began in December 205 bitcoins produced. In doing so, CleanSpark has not lost sight of its original focus. The company also announced in April that it had increased its microgrid contracts by $ 16.2 million net, a year-over-year increase of 220%. Commenting on this stock for HC Wainwright, top analyst Amit Dayal writes: “We believe that running CleanSpark in the microgrid and bitcoin mining area could enable the company to exceed our expectations for the 2021 fiscal year since our assumptions now seem relatively conservative. The stock has retreated since its highs in January 2021 alongside a few other Bitcoin mining comps and general weakness in small-cap names. However, we believe that Bitcoin prices are well above our assumptions, no known changes in mining operations are known, and the company is increasing its backlog on microgrids. The operational side of the story appears to be intact. We believe that CleanSpark’s valuation remains compelling at its current level, as the company expects sales and earnings growth of more than 150% and more than 1,000% year-on-year, respectively, for the 2022 financial year. “Consistent with his bullish outlook, Dayal has given CLSK shares a buy rating with a target price of $ 50, indicating confidence in a robust upward trend of 135% over the next 12 months. (To view Dayal’s track record, click here.) There are only two recent reviews of this stock – including Dayal – but both agree: This is one to buy. CLSK shares are currently trading at $ 21.26 and the price target averages $ 47.50, indicating an upward move of 123% this year. (See CleanSpark’s stock analysis at TipRanks.) To find good ideas for trading stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, ‘a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.