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Ride Crypto Boom with these 3 stocks
About 15% of the American public owns some form of cryptocurrency – and much of that group has jumped in the last two years. Digital currencies – Bitcoin is the most famous, but there are many others – offer users a separate set of benefits based on their blockchain technology. First, cryptocurrencies are secure – as a digital technology, the blockchain is notoriously difficult to break. Second, coins have the main attribute of any stock of value: scarcity. There is a mathematical limit to how many bitcoins, for example, will ever exist – and this limit gives them their value. People want a secure online currency, are willing to pay for it, and relatively scarce (compared to traditional fiat currencies) cryptocurrencies offer both attributes. The result has been a boom in recent years as investors have begun to take the crypto sector seriously. Of course, any digital currency will need a set of services to be usable. Financial companies to support it, and payment servers to process transactions, to name just two. Other companies and big business figures – Elon Musk easily comes to mind – will invest heavily in it. All this creates a landscape in which investors can take advantage of crypto without ever buying a real coin. They can buy from companies that are willing to climb the cryptocurrency boom to higher profits. How big is the crypto? The market for it exceeded $ 2 trillion earlier this month, a number that is hard to turn to. So, as usual, we turned to the TipRanks platform to help us make sense of the crypto equity landscape. We have deployed three stocks – from different sectors – which, according to some of the best analysts on the Street, are ready to make a profit from cryptocurrency. Let’s dive. Silvergate Capital (SI) We will start in a financial world appropriate when discussing a new financial asset such as crypto. Silvergate Capital is a commercial bank, chartered in California and providing financial services and infrastructure to clients in the digital currency industry. Silvergate has been in the financial industry for more than 3 decades and has been making a profit every year for the past 21 years. Silvergate entered the digital currency in 2013 with an active pursuit of digital currency customers. Today the company has over 1100 customers in this sector. In March of this year, Silvergate expanded its digital currency services to use a custody service to hold Bitcoin as collateral for US dollar trade loans. The service offers large bitcoin holders a way to access liquid capital without selling the underlying cryptocurrency. Silvergate provides custody of bitcoin collateral through Coinbase and Fidelity Digital Assets. In a recent financial announcement for 1Q21, Silvergate reported EPS of 55 cents per share, beating industry forecasts by 14% and even better, growing 139% year on year. Supporting profit growth, Silvergate reports 29% customer base growth on an annual basis. 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 can also be seen in the value of the shares, which is a staggering 582% in the last 12 months. Canaccord Genuity’s 5-star analyst Joseph Waffi was impressed by Silvergate’s growth in digital currency banking and wrote: q increase in Q4. This impressive growth in deposits is due to similarly strong growth in demand for the Silvergate Exchange Network (SEN), as institutional interest in bitcoin continues to accelerate. Equally important are the consequences of the two strategic deals with Fidelity and Coinbase, signed in Q1. In our view, it is clear that not only is it emerging as a key financial services mechanism in all institutional cryptocurrency trading, but SI is now becoming a key partner for cryptocurrency trustees seeking to offer margin loans. Importantly, Silvergate has a major competitive advantage in crypto margin lending costs, given its basic banking statutes, which provide a very low cost of capital by raising zero-interest customer deposits. Waffy, who is ranked in the top 100 by Wall Streets analysts, is buying SI shares and its $ 150 price point suggests that the shares have room for growth of 36% this year. (To watch Waffi’s recording, click here.) Canacord’s Waffi is no less retreating in his views. Silvergate has 5 recent reviews and they include 4 purchases against a one-time hold for a consensus rating of a strong purchase. The share price is $ 107.22, and the average price price of $ 158 suggests 45% up – even more bullish than Waffi allows – for next year. (See Silvergate stock analysis in TipRanks.) PayPal Holdings, Inc. (PYPL) Although Silvergate is hardly a household name, PayPal has become one. The company is a market leader in online payment processing, thriving in itself, and its highest revenues have grown from $ 17.7 billion in 2019 to $ 21.4 billion in 2020. The company has registered consistently revenue increased in the second, third and fourth quarters of last year and saw Q4 EPS reach $ 1, compared to 43 cents in the first quarter of the previous year. It is not surprising that PayPal’s growth came during the pandemic. We all know that e-commerce thrived last year, taking advantage of social lock policies, and e-commerce required online payment processors. PayPal has a leading role in this industry, with over 377 million active accounts, performing 4.4 billion payment transactions totaling $ 277 billion. In a major development for the company, PayPal announced in April that its mobile payment app, Venmo, will now offer consumers the ability to buy, sell and hold four cryptocurrencies: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. According to one study, about 30% of Venmo users already use crypto; this move makes their transactions more convenient and opens an easy crypto path for Venmo’s full 70 million user base. BTIG analyst Mark Palmer points to a key factor in PayPal’s new Venmo feature when he writes: “This move marks the first time that consumers will be able to use crypto to make purchases from a large number of merchants. The crypto option is already available in the US with more than half of PYPL’s 29mm retailers, and the company says more will be added soon. “Palmer believes that this move to crypto will be net positive for PayPal and supports this with a purchase rating and a price price of 345 dollars, which implies a one-year growth of 31%. (To watch Palmer’s record, click here.) That Wall Street agrees with Palmer is evident from Strong Buy’s consensus stock rating, supported by new less than 29 recent buy ratings. They exceed the 4 detentions that are also set here. PYPL shares are trading at $ 262.29, and their target for an average price of $ 310.68 suggests that the shares have room for growth of 18% this year. (See PayPal’s stock analysis in TipRanks.) CleanSpark (CLSK) Finally, CleanSpark is both a software company and a clean energy company. This makes more sense than would be obvious at first – CleanSpark software products are designed to manage micro-networks and distributed power systems. These systems allow consumers to go offline by abandoning traditional energy distribution to switch to cleaner green energy sources. CleanSpark provides software to manage these systems. Earlier this year, CleanSpark made several bold moves that made waves in its own industry and in crypto. In March, the company launched a public offering – more than 9 million common shares – at $ 22 each, raising more than $ 200 million before expenses. Only this received notice from investors. In addition, the company began using the funds to buy more bitcoin mining platforms. These are the computer systems through which new bitcoins are generated. They draw huge amounts of energy, take out a lot of heat – and CleanSpark is investing heavily not only in computing mining platforms that will slowly produce new bitcoins, but also in clean energy infrastructure to make the company’s 95% carbon-free location in Atlanta. The company’s latest investment in bitcoin mining will begin to take shape later this year. Finally, in April, CleanSpark announced that it had secured contracts for an additional 22,680 bitcoin miners. When all new platforms are installed and put into operation, CleanSpark expects to increase its bitcoin production to over 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 operating operating systems in December. In all this, CleanSpark has not lost sight of its original focus. The company also announced in April that it had secured a net increase of $ 16.2 million in its micronetworks contracts, up 220% from the previous year by 220%. Covering this stock for HC Wainwright, top analyst Amit Dayal wrote: “We believe that CleanSpark’s performance on the microgrid and bitcoin mining fronts could position the company to exceed our expectations for the FY2021, as our assumptions now seem relatively conservative . The stock returned from its highs in January 2021, along with some other bitcoin diggers and a general weakness in small-cap names. However, we believe that with bitcoin prices, which remain well above our assumptions, there are no changes in mining operations, and the company adds to its lag in the microgrid, the operational side of the story seems intact. We believe that CleanSpark’s valuation remains convincing at current levels, with the company setting revenue and profit growth of more than 150% and over 1000%, respectively, in FY2022. “In line with its optimistic outlook, Dayal gives CLSK a share rating for a purchase with a price tag of $ 50, which shows confidence in strong growth of 135% over the next 12 months. (To view Dayal’s record, click here.) There are only two recent reviews of this stock – including Dayal’s – but they both agree: it’s one to buy. CLSK shares are currently trading at $ 21.26, with a price target averaging $ 47.50, an increase of 123% this year. (See CleanSpark’s stock analysis in TipRanks.) To find good ideas for stocks trading at attractive ratings, visit TipRanks’ Best Stocks to Buy, a newly created tool that combines all TipRanks statistics. Disclaimer: The views expressed in this article are those of the analysts only. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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