Ride the Crypto Boom with These 3 Stocks
Some 15% of the American public owns some form of cryptocurrency – and a large part of that group jumped on the bandwagon in the last two years. The digital currencies – Bitcoin is the most famous, but there are scores of others – offer users a distinct set of advantages, based on their blockchain technology. First, the crypto coins are secure – as a digital technology, blockchain is notoriously difficult to break. Second, the coins have the chief attribute of any store of value: scarcity. There is a mathematical limit to how many Bitcoin, for example, will ever exist – and that limit gives them their value. People want a secure online currency, are willing to pay for it, and the relatively scarce (compared to traditional fiat currencies) crypto coins offer both attributes. The result, in recent years, has been a boom as investors have started looking seriously at the crypto sector.
Of course, any digital currency is going to need a range of services to be usable. Financial companies, to back it, and payment servers, to handle transactions, to name just two. Other companies and major business figures – Elon Musk comes readily to mind – will invest heavily in it. All of this creates a landscape in which investors can profit from crypto without ever buying an actual coin. They can buy into the companies that are poised to ride the cryptocurrency boom to higher profits.
How big is crypto? The market for it surpassed $2 trillion earlier this month, a number that’s hard to get your head around. So, as usual, we’ve turned to the TipRanks platform to help us make sense of the equity landscape as pertains to crypto. We’ve located three stocks – from different sectors – that according to some of the Street’s top analysts are all set to deliver crypto charged gains. Let’s dive in.
Silvergate Capital (SI)
We’ll start in the financial world, fitting when we’re discussing a new financial asset like crypto. Silvergate Capital is a commercial bank, chartered in California and providing financial services and infrastructure to customers in the digital currency industry. Silvergate has been in the finance industry for over 3 decades and has turned a profit every year for the last 21 years.
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Silvergate got into digital currency in 2013, with an active pursuit of digital currency customers. Today, the company has over 1,100 customers in this sector. In March of this year, Silvergate expanded its digital currency services, using a custody service to hold Bitcoin as collateral for US dollar commercial loans. The service offers large Bitcoin holders a way to access liquid capital without selling off the underlying cryptocurrency. Silvergate provides custody for the Bitcoin collateral through Coinbase and Fidelity Digital Assets.
In the recent financial release, for 1Q21, Silvergate reported EPS of 55 cents per share, beating the industry estimates by 14% and better yet, growing 139% year-over-year. Supporting the earnings growth, Silvergate recorded 29% customer base growth year-over-year. Digital currency deposits grew from $5 billion at the end of December to $6.8 billion at the end of March.
The company’s rapid growth can also be seen in the share value, which is up an astounding 582% in the past 12 months.
5-star analyst Joseph Vafi, of Canaccord Genuity, is impressed by Silvergate’s growth in digital currency banking, and writes, “Silvergate delivered again in Q1, highlighted by another near 40% sequential increase in deposits on top of the 130+ % q/q increase in Q4. This impressive deposit growth was driven by similarly strong growth in demand for use of the Silvergate Exchange Network (SEN) as institutional interest in bitcoin continues to accelerate. Just as important are the implications of the two strategic deals with Fidelity and Coinbase inked in Q1. In our view, it is becoming clear that not only is it emerging as a key financial services cog across all of institutional cryptocurrency trading, but SI is now becoming the key partner for cryptocurrency custodians seeking to offer margin lending. Importantly, Silvergate has a core competitive cost advantage in crypto margin lending, given its underlying bank charter which provides a very low cost of capital via raising zero interest customer deposits.”
Vafi, who is rated in the top 100 of Wall Streets analysts, puts a Buy on SI shares, and his $150 price target suggests the stock has room for 36% growth this year. (To watch Vafi’s track record, click here.)
Canaccord’s Vafi is no outlier in his bullish views. Silvergate has 5 recent reviews, and they include 4 Buys against a single Hold, for a Strong Buy consensus rating. The stock’s share price is $107.22, and the average price target of $158 implies a 45% upside – even more bullish than Vafi allows – for the coming year. (See Silvergate’s stock analysis at TipRanks.)
PayPal Holdings, Inc. (PYPL)
While Silvergate is hardly a household name, PayPal has become one. The company is the market leader in online payment processing, a booming industry in itself, and its top line revenue grew from $17.7 billion in 2019 to $21.4 billion in 2020. The company recorded sequential increases in revenue the second, third, and fourth quarters of last year, and saw Q4 EPS reach $1, up from 43 cents in the prior’s year’s first quarter.
That PayPal’s growth has come during the pandemic is unsurprising. We all know e-commerce boomed last year, benefitting from social lockdown policies, and e-commerce requires online payment processors. PayPal has a leading role in that industry, with over 377 million active accounts, conducting 4.4 billion payment transactions totaling $277 billion in payment volume.
In a major development for the company, PayPal announced in April that its mobile payment app, Venmo, will now offer users the ability to buy, sell, and hold four crypto currencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. According to one survey, some 30% of Venmo’s users already deal in crypto; this move makes their transactions more convenient, and opens an easy avenue to crypto for Venmo’s full 70-million-strong userbase.
BTIG analyst Mark Palmer, points out a key factor in PayPal’s new Venmo feature when he writes, “The move marked the first time that consumers will be able to use crypto to make purchases at a large array of merchants. The crypto option is now available in the U.S. with more than half of PYPL’s 29mm merchants, with the company stating that more would be added soon.”
Palmer believes that this move toward crypto will be a net positive for PayPal, and he backs that with a Buy rating and $345 price target implying a one-year upside of 31%. (To watch Palmer’s track record, click here.)
That Wall Street agrees with Palmer is obvious from the Strong Buy consensus rating on the stock, supported by new fewer than 29 recent Buy ratings. These outweigh the 4 Holds that have also been set here. PYPL shares are trading for $262.29, and their $310.68 average price target suggests the stock has room to grow 18% this year. (See PayPal’s stock analysis at TipRanks.)
CleanSpark (CLSK)
Last up, CleanSpark, is both a software company and a clean energy company. That makes more sense than at first would be apparent – CleanSpark’s software products are designed to control microgrid and distributed energy systems. These systems allow users to go off-grid, opting out of traditional power distribution to tap into cleaner green energy sources. CleanSpark provides the control software for these systems.
Earlier this year, CleanSpark made a couple of bold moves that made waves in its own industry, and in crypto. In March, the company put an offering of public shares on the market – more than 9 million common shares – at $22 each, raising more than $200 million before expenses. That alone got notice from investors.
In addition, the company started using the funds to buy up more Bitcoin mining rigs. These are the computer systems through which new bitcoins are generated. They draw massive amounts of power, put out a lot of heat – and CleanSpark has invested heavily, not only in the computational mining rigs, which will slowly produce new bitcoins, but in the clean energy infrastructure to make the company’s Atlanta mining location 95% carbon-free. The company’s latest investment in Bitcoin mining will start to take physical shape later this year.
And finally, in April, CleanSpark announced that it had secured contracts for an additional 22,680 Bitcoin miners. When all of the new rigs are installed, up and running, CleanSpark expects to increase its Bitcoin mining production to more than 3.2 EH/s. In the quarter ended March 31, CleanSpark produced 144 Bitcoins, and has produced a total of 205 Bitcoins since it began mining ops in December.
In all of this, CleanSpark has not lost sight of its original focus. The company also announced in April that it had secured a net $16.2 million increase in its microgrid contracts, a year-over-year increase of 220%.
In coverage of this stock for H.C. Wainwright, top analyst Amit Dayal writes, “We believe CleanSpark’s execution on the microgrid and Bitcoin mining fronts could position the company to exceed our expectations for FY2021, as our assumptions now appear relatively conservative. The stock has pulled back since its January 2021 highs alongside some other Bitcoin mining comps, and general weakness across small-cap names. However, we believe, with Bitcoin prices remaining well above our assumptions, no known changes to mining operations, and the company adding to its microgrid backlog, the operational side of the story appears to be intact. We believe CleanSpark’s valuation remains compelling at current levels with the company set for YoY revenue and earnings growth of more than 150% and more than 1,000%, respectively, in FY2022.”
In line with his upbeat outlook, Dayal gives CLSK shares a Buy rating with a $50 price target that indicates confidence in a robust 135% upside in the next 12 months. (To watch Dayal’s track record, click here.)
There are only two recent reviews on this stock – including Dayal’s – but both agree: this is one to Buy. CLSK shares are currently trading for $21.26 and the price target averages to $47.50, suggesting an upside of 123% this year. (See CleanSpark’s stock analysis at TipRanks.)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Forget Bitcoin: Here are The Crypto Assets To Follow
Bitcoin — all the rage since first crossing the $1,000 price mark in 2017 — is the least exciting crypto asset on the market. Like many “firsts,” Bitcoin enjoys widespread brand recognition, but that recognition doesn’t accurately reflect its value as an asset, particularly in comparison to other available assets in the crypto market.
Bitcoin is to the crypto market what Netscape was to search engines in the early days of the Internet. There’s a need for a better solution, and the market is responding.
Real innovation in the crypto market now takes place in decentralized finance (DeFi) and the mainly Ethereum-based (ETH) infrastructure that underpins it. DeFi, which supports everything from decentralized exchanges to token based lending, mimics the structure of traditional financial markets in the open, transparent forum of a blockchain-based infrastructure. According to ConsenSys, more than $2 billion worth of transactions occur daily on decentralized exchanges and more than $23 billion in outstanding decentralized loans have been granted as of March 2021.
And that’s just the tip of the iceberg.
Rather than focus on Bitcoin, the following are crypto assets worth watching, as they are best positioned to capitalize on the growing popularity and practicality of decentralized finance:
UniSwap (UNI)
UniSwap is a decentralized liquidity protocol that facilitates automated trading of decentralized finance tokens. Compatible with any ERC-20 token in the ethereum ecosystem, it has a current market cap exceeding $16 billion and
continues to grow rapidly. In January of this year, it traded around $5 — it currently trades in the $30 range.
UNI is well positioned within the DeFi space, as it represents the largest decentralized exchange in the crypto market. As such, it is slated to capitalize on the onset of FinTech 2.0, of which DeFi is the key component, and the market’s expected multi-trillion dollar growth over the next several years as it converges with traditional finance.
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Litecoin (LTC)
Litecoin, an early alt coin dating back to 2011, took some of the best features from Bitcoin while focusing on providing a less onerous processing framework to decrease the block generation time. Litecoin can process a block every 2.5 minutes, compared to Bitcoin’s 10 minutes. It is a peer-to-peer Internet currency with a fully decentralized, open source, global payment network. LTC is a great example of the potential for peer-to-peer cryptocurrency and the importance of continuous innovation.
LTC started 2021 trading at roughly $124 and currently trades at around $262. It boasts an almost $18 billion market cap and a 24-hour transaction volume of more than $10 billion. It is relatively liquid and has great potential for further upside.
Chainlink (LINK)
Chainlink is a decentralized network designed to connect smart contracts with data from the non-crypto space. LINK provides reliable, tamper-proof inputs and outputs for complex smart contracts on any blockchain and will potentially be the “link” that weaves different networks together. It serves as another solid example of the strengths of DeFi, as it’s a connector and a facilitator for further innovation.
LINK’s price has risen along with the other core DeFi tokens: it increased from $0.19 in January 2018 to approximately $35, currently.
The DeFi and the general crypto infrastructure space represents one of the top opportunity sets for the next decade across all asset classes. As the crypto market continues to mature and to grow in participation, these players in the ecosystem will stand to benefit in ways that Bitcoin simply cannot. The current growth rate in this space promises to continue, with these technologies eventually evolving into the dominant players in financial markets. But only those best positioned for that future will endure.
If the crypto space is truly successful, there will be hundreds of thousands, if not millions of tokenized assets trading on blockchains with smart contract components. Bitcoin will be just one of them, and certainly not the most attractive.
Nikolas Joyce is CIO of The Strategic Funds.
Edited Photo Via Unsplash
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© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
eBay Looking Into Crypto Payment Option
The New York Times
PIERRE, S.D. — With Republicans hungry to cultivate their next generation of national leaders, it is not a Capitol Hill comer or a veteran battleground-state politician who is stirring interest by fusing Trumpism with a down-home conservatism spin. It is the first-term governor of South Dakota, Kristi Noem, a rancher who delights in sharing images of herself shooting pheasants and riding horses. Noem began drawing wider attention last year for cozying up to former President Donald Trump — so much so that she inspired suspicion that she was angling to replace Mike Pence on the 2020 ticket — and hosting Trump at a July 4 Mount Rushmore event where she gave him a model of the monument with his face included. Her defiance of coronavirus restrictions and her eagerness to project a rugged Great Plainswoman image helped her come in second in a 2024 straw poll of far-right conservatives looking for candidates if Trump does not run again. But her approach to politics has sometimes made for rocky relations with her base. Late last month, she got herself into a showdown with the Republican-controlled state Legislature over her veto of a bill barring transgender girls from school sports. And as some party leaders were pressing her to resolve that fight, she prompted eye-rolling at home by inserting herself in an unrelated skirmish — over Lil Nas X’s “Satan Shoes.” Sign up for The Morning newsletter from the New York Times “We are in a fight for the soul of our nation,” she wrote on Twitter, picking a fight with the rapper over his endorsement of $1,000 sneakers featuring a pentagram and, ostensibly, a drop of blood. If Gov. Ron DeSantis of Florida is widely seen as the brash heir apparent to Trump, and senators like Josh Hawley and Tom Cotton are attempting to put a more ideological frame on Trumpism, Noem is trying to cement her place as the only female Trump ally echoing the former president’s trigger-the-left approach among the upper tiers of potential 2024 candidates. But her stumble on the trans bill planted some doubts among social conservatives, and her appearances on Fox News most weeks and her time spent at Trump’s Mar-a-Lago fundraising site have prompted griping in South Dakota. At home, Noem’s apparent White House ambitions bother Republicans who want her focused on the state’s needs, even as some in the party relish the attention her rising profile is bringing to the tourism-dependent state. She is now on her fourth chief of staff in just over two years; has an increasingly awkward relationship with John Thune, South Dakota’s senior senator; and has favored the national party circuit over building relationships in the turn-of-the-century state Capitol in Pierre. “Let’s focus on the state of South Dakota right now,” Rhonda Milstead, a Republican state representative, said in an interview between floor sessions on the so-called veto day. “And if you’re going to run for governor in 2022, let’s focus on our state. I voted for her when she ran because I believe she cared about the state of South Dakota, so let’s do it.” Noem’s approach is markedly different from the arc of other modern governors-turned-presidents, such as Bill Clinton and George W. Bush. Those politicians assiduously courted their states’ kingmakers, held up their legislative achievements as campaign calling cards and waited until they had been reelected to the governor’s office before auditioning on the national stage. The question is whether that was then. As she steps up her already-busy travel schedule — she was the keynote speaker at the Kansas GOP’s convention this month and will address Arkansas Republicans in June — Noem, 49, may represent the purest test of the potency of Trump-style pugilism. “It’s a contest about who can trigger the media and Democrats the most, and Noem is trying to get in that conversation,” said David Kochel, a Republican strategist and a veteran of presidential politics. “It’s, ‘Can I come up with something that’s going to inflame Rachel Maddow and raise awareness among conservatives because Fox will cover how much the left hates me?’” In the post-Trump party, a willingness to confront the news media and do battle with the left, preferably in viral-video snippets, is more compelling to activists than amassing a record of achievement or painstakingly building coalitions. Appearing at the Conservative Political Action Conference in February, Noem received her loudest applause for saying that Dr. Anthony Fauci “is wrong a lot.” Moreover, with Republicans having lost the presidency and both chambers of Congress after struggling among female voters, many in the party want to elevate a woman to their ticket in 2024, when Vice President Kamala Harris is likely to be the Democratic nominee for president or vice president. “She is one of the strongest examples of a great Republican woman,” said Glynis Gilio, a law student, who waited with a few dozen other CPAC attendees for Noem’s autograph. “We really need that strong female conservatism to pack a punch.” Russell Olson, a former South Dakota lawmaker who was elected to the Legislature alongside Noem in 2006, said Noem is “a conservative woman and can talk without regurgitating talking points, so she rises to easy consideration in my book.” Olson, whom Noem reappointed to the state Game, Fish and Parks commission, is not the only South Dakota Republican eager to remain on the governor’s good side. A number of party officials and donors did not want to speak on the record about Noem’s political prospects, many of them pointedly observing that it is a small state. The governor declined an interview and, in keeping with her public posture, had a spokesperson email to archly ask if the story would be “about next year’s reelection campaign?” Other South Dakota Republicans are downright gleeful about the speculation — though not necessarily because they are eager to see her become president. “Love her or hate her, she’s the best resource South Dakota has going for it right now,” said Lee Schoenbeck, leader of the state Senate. “She’s got such a platform.” Despite the state’s high COVID death toll per capita and the outbreak stemming from the Sturgis motorcycle rally that drew nearly 500,000 biker enthusiasts last fall, many Republicans in South Dakota believe that the governor’s opposition to shutdowns contributed to South Dakota’s lowest-in-the-country unemployment rate, kept tourists coming and made the state newly appealing to transplants. Whether Noem ultimately lands on the 2024 ticket or not, she has made a name for herself nationally by re-creating South Dakota as a sort of red-state oasis for visitors, new residents and businesses. She won the governorship by just 3 1/2 percentage points, a slim margin in a state that has not elected a Democratic governor since 1974. Her approval rating stood at just 39% at the end of 2019, according to a private Republican poll shared by a party official familiar with the results. By last June, three months into the virus outbreak, the same pollster found that 62% of the state’s voters approved of her performance. Noem had a relatively modest profile during four terms serving in Congress and in her first year as governor. By the end of 2020, however, she had gained the notice of Trump, who was egging her on to challenge Thune in his primary next year. She has disclaimed any interest in such a challenge. But her coziness with Trump and her hiring of the hard-charging Corey Lewandowski, the former president’s onetime campaign manager, has put a chill in her relationship with Thune, the second-ranking Senate Republican. Thune has been clear that he wants the GOP to ease away from being a cult of personality and focus on ideas. “Thune wants to move on and can’t with a Trump clone in own backyard,” said Drey Samuelson, the longtime top aide to former Sen. Tim Johnson of South Dakota. Noem plainly sees her opening as a Trump-of-the-prairie provocateur. In addition to her ubiquity on Fox News — one segment featured her escorting a network contributor on the state’s annual buffalo roundup — she has taken to Twitter with gusto. And not just to troll rappers. “This is how we do social distancing in South Dakota,” she wrote above a video of her shooting and downing a nearby pheasant, a clip that has drawn nearly 7 million views. She also starred in a tourism commercial that aired nationally last year during the COVID surge. “We’re open for opportunity — and always will be,” Noem said as images of Mount Rushmore and galloping bison flashed on the screen. It is difficult to overstate the importance of marketing to South Dakota. At the confluence of Midwest and West, and bifurcated by the Missouri River, the state has relied on tourism since the early part of the 20th century, when another ambitious governor, Peter Norbeck, relentlessly promoted the development of a granite monument in the Black Hills that could lure visitors to the region. Noem has shown a similar passion for making the state a destination, most memorably mixing tourism with politics by ensuring that fireworks could be displayed at Mount Rushmore to entice Trump there last year. South Dakota similarly trumpets its pheasant hunting, walleye fishing and even more flagrant tourist pit stops, like Wall Drug and the Mitchell Corn Palace. “We don’t have a lot of industry in South Dakota, and we don’t have a lot of natural resources pumped out of the ground or mined, so when you have a state that’s basically ag and ranching, you need those out-of-state dollars,” said Ted Hustead, whose family owns Wall Drug, whose Western-themed collection of stores and restaurants is a major tourist attraction. That need is what put Noem in a vise over the transgender legislation. She initially said she would support the bill. But she reversed course after facing a backlash from South Dakota’s influential business community, which worried that the National Collegiate Athletic Association would pull moneymaking basketball tournaments out of the state. Noem was pressed about her change of mind by Tucker Carlson in a rare adversarial Fox News interview, and the flap fueled suspicions among social conservatives. “She says whatever she thinks she needs to say,” said Taffy Howard, a state lawmaker who has pressed Noem to disclose the details of state money she has been using for security on her frequent trips. “This was all about keeping her donors happy.” The House overrode Noem’s partial veto of the trans bill, but the state Senate declined to take action, dooming the legislation. Running for reelection with Trump’s support in a conservative state, Noem should be well-positioned next year. South Dakota, however, does have a history of spurning its politicians when their focus becomes more national than local. “Tom Daschles and George McGoverns are examples of what happens when you don’t pay attention at home; you got to make sure you’re balancing that well,” said Marty Jackley, a former state attorney general who lost to Noem in the primary election for governor, alluding to two of South Dakota’s most famous figures. Olson, Noem’s former colleague in the Legislature, said he nevertheless expected Noem to be a formidable candidate should she run for president. He learned his lesson, he said, after supporting her primary opponents when she ran for South Dakota’s lone House seat in 2010 and then for governor in 2018, and he was “not going to get the third strike.” This article originally appeared in The New York Times. © 2021 The New York Times Company