As I write, Dogecoin (CCC:DOGE-USD) is trading at 60 cents. At the beginning of April 2021, Dogecoin was trading near 6 cents. Multi-fold return within a short period is just one reason why cryptocurrencies have witnessed wider adoption. With crypto adoption at an inflection point, it makes sense to include a few crypto stocks in the list of stocks to buy right now.
To elaborate on the pace of crypto adoption, in July 2020, the total number of cryptocurrency users globally was 74 million. With a surge in Bitcoin (CCC:BTC-USD), the interest in the crypto space has also increased significantly. In January 2021, global crypto users surpassed 100 million. This has increased investor interest in companies related to cryptocurrency mining, blockchain and cryptocurrency trading. There are several crypto stocks that have already delivered multi-fold returns in the last few quarters.
However, most of these stocks have cooled off after trading at all-time highs. After the profit-booking phase, crypto stocks seem to be in a phase of consolidation. A breakout on the upside seems imminent for the stocks that are discussed below.
Let’s talk about seven stocks to buy right now in the cryptocurrency space.
- Coinbase Global (NASDAQ:COIN)
- Marathon Digital (NASDAQ:MARA)
- HIVE Blockchain (OTCMKTS:HVBTF)
- Square (NYSE:SQ)
- Riot Blockchain (NASDAQ:RIOT)
- Canaan (NASDAQ:CAN)
- MicroStrategy (NASDAQ:MSTR)
Stocks to Buy Right Now: Coinbase Global (COIN)
After a big listing and highs around $430, COIN stock currently trades at $273. For any investor bullish on cryptocurrencies, the stock is worth holding in your portfolio.
Given the rapid adoption of crypto, it’s not surprising that Coinbase is on a high-growth trajectory. For fiscal year 2020, the company reported revenue growth of 139.4% on a year-over-year basis to $1,277 million. For the year, the company has guided for 41% revenue growth to $1,800 million.
The number of verified users on the company’s platform has also surged from 32 million in FY2019 to 56 million in the first quarter of 2021. It seems likely that verified users will continue to grow at a healthy pace. Furthermore, monthly transacting users reached 6.1 million as of Q1 2021.
The company’s business is also attractive from a margin perspective. For the year, the company has guided for EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.1 billion. This would imply an EBITDA margin of 61.1%. On a year-over-year basis, the company’s EBITDA margin is likely to expand by 2,000 basis points.
Besides growth in retail users, Coinbase also has a strong base of institutional customers. As of December 2020, the company reported 7,000 institutional customers. This provides another avenue for revenue growth.
Overall, COIN stock is attractive with strong growth and the potential to deliver robust cash flows in the long term.
Marathon Digital (MARA)
MARA stock has skyrocketed by more than 7,300% in the last year. The stock seems to be in a consolidation range and a fresh breakout is likely in the foreseeable future.
Marathon Digital is a cryptocurrency miner with a focus on Bitcoin. It’s worth noting that in January 2021, the company mined 50.4 Bitcoins. With significant expansion underway, the company mined 162.1 Bitcoins in April 2021.
However, this is just the beginning of growth for the company. By Q1 2022, the company expects to have 103,120 miners deployed. The company expects to mine 55 to 60 Bitcoins per day once the expansion is completed. Importantly, at a $55,000 Bitcoin price, the company expects monthly revenue of $94.4 million and mining profit of $86.5 million.
It seems very likely that Bitcoin will be trading well above $55,000 in Q1 2022. This explains the reason for MARA stock going ballistic. Once the expansion is completed, the company will have an annual revenue visibility of $1.1 billion.
It’s worth noting that the company has partnered with Beowulf for low-cost electricity. The company expects average Bitcoin production cost of $4,541. Considering the mining profit, the company’s cash flow is likely to surge in FY2022 and beyond.
Stocks to Buy Right Now: HIVE Blockchain (HVBTF)
HVBTF stock is also among the stocks to buy right now in the cryptocurrency segment. HIVE Blockchain is a more diversified miner with mining operations in Ethereum (CCC:ETH-USD) and Bitcoin.
For Q3 2021, the company reported income from digital currency mining of $13.7 million. Income growth was 174% on a year-over-year basis. The company mined 21,500 Ethereum and 165 Bitcoin during the quarter. It’s worth noting that the Ethereum price has surged to an all-time high in the recent past. With primary focus on the altcoin, the company seems well-positioned to benefit.
Further, the company is pursuing 40% capacity expansion in Iceland, 20% in Sweden and 200% in Canada. In the coming quarters, it’s likely that revenue from digital currency mining will continue to surge.
In another important development, HIVE Blockchain announced a strategic partnership and share swap agreement with DeFi Technologies. The latter is involved in building and managing assets in the decentralized finance sector.
It’s worth noting that deposits in DeFi application increased from “$1 billion in June to just under $40 billion by late January 2021.” Therefore, the DeFi space could be another game changer for the company besides income from cryptocurrency mining.
SQ stock has surged by 238% in the last year. However, the stock remains attractive with strong growth in the Cash App segment.
In FY2020, the company’s Cash App reported 3 million active Bitcoin customers. Further, in January 2021, one million customers purchased Bitcoin for the first time.
The Bitcoin transactions generated revenue of $1.76 billion for the company in FY2020. Revenue increased tenfold on a year-over-year basis. In addition, reported gross profit was $41 million, which increased 13 times.
As adoption of cryptocurrencies increases, the company is positioned to benefit. It’s also worth noting that for Q4 2020, the company reported purchase of $170 million in Bitcoin.
The company believes that the investment is a part of its “ongoing commitment to Bitcoin.” Further, the company “plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis.”
Clearly, Square is bullish on Bitcoin. I would not be surprised if the company further expands operations in the cryptocurrency space. The company already has a banking license. It would be interesting to see if Square also creates presence in the DeFi space.
Stocks to Buy Right Now: Riot Blockchain (RIOT)
RIOT stock is another name among the stocks to buy right now. After surging to a high of $79.50, the stock currently trades around $35. The stock looks poised for a renewed surge from current levels.
For Q4 2020, the company reported revenue growth of 116%. More importantly, the company mined 303 Bitcoin in Q4 2020, as compared to 222 Bitcoin mined in Q3 2020. The company’s hashing capacity has increased by 460% on a year-over-year basis. This is likely to translate into sustained growth. Riot has already announced that for Q1 2021, 491 Bitcoin were mined.
In April 2020, the company executed an order for 42,000 S19j Antminers from Bitmain for $138.5 million. As of April 2021, the company’s hashing capacity was 1.6 EH/s. However, by Q4 2022, the company plans to increase the hashing capacity to 7.7 EH/s.
This is likely to translate into sustained growth in the number of Bitcoin mined on a quarter-over-quarter basis. The company therefore seems positioned for accelerated top-line and cash-flow growth.
In April 2021, Riot Blockchain also acquired Whinstone. The latter has the largest Bitcoin hosting facility in the United States. With a strong cash buffer, the company is positioned for sustained organic and inorganic growth.
I have talked about two Bitcoin-mining companies that are placing big orders for miners to ramp up capacity. Canaan, as a seller of mining machines, seems well-positioned to benefit in the coming years.
CAN stock had surged to a high of $39.10 before correcting to current levels around $12. This seems like an attractive entry point.
Before talking about the growth triggers, it’s worth mentioning that Canaan reported cash of $60 million as of December 2020. Recently, the company had a direct placement of ADS and warrants to raise $170 million. With a cash buffer of over $200 million, the company seems well-positioned to pursue aggressive growth.
From a revenue growth perspective, Canaan reported an order backlog of $174 million as of Q4 2020. In April 2021, the company announced an agreement with Genesis Digital Assets for sale of Bitcoin-mining machines worth $93.63 million. A long-term partnership with Genesis potentially implies further orders in the coming years.
Last month, the company also received an order from Mawson Infrastructure Group for 11,760 Bitcoin-mining machines. The point I am making here is that order inflow is robust for the company, and it’s likely to translate into healthy revenue growth. CAN stock is therefore be in my list of stocks to buy right now.
Stocks to Buy Right Now: MicroStrategy (MSTR)
MSTR stock has surged by 409% in the last one-year period. The company has been among the most aggressive purchasers of Bitcoin.
At a market capitalization of $6 billion, MSTR stock does look attractive. To put things into perspective, the company was holding 91,579 Bitcoins as of April 2021. At a Bitcoin price of $55,700, the market value of the company’s holdings is $5.1 billion.
According to a survey of Goldman’s institutional clients, 76% of clients believe that Bitcoin could reach $100,000 this year. If this holds true, the market value of the company’s Bitcoin holdings will be $9.2 billion. Clearly, the stock seems attractively valued.
I also believe that MicroStrategy has the financial flexibility to expand presence in the cryptocurrency space. With more than $5 billion in cash and crypto assets, the company can pursue growth opportunities in blockchain, DeFi and cryptocurrency mining. This is just a speculative view, but seems likely in the long-term, considering the company’s focus on digital assets.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.