Blockchain stocks remain popular due to the increasing use of blockchain and decentralization, driven by factors such as globalization and a growing distrust in traditional political systems. As more people seek self-determination and the need for efficient financial systems in the globalized world, blockchain and decentralized technologies gain traction.
Here are seven blockchain-related stocks that are currently drawing attention:
CleanSpark Inc. (CLSK)
CleanSpark Inc. (CLSK) makes an appealing addition to this list due to its well-balanced blend of long-term growth prospects and short-term catalysts. Looking at the long-term perspective, the company operates a low-carbon Bitcoin mining business model, which aligns with valuable ESG (Environmental, Social, and Governance) considerations. This strategic positioning may open doors to benefits like improved access to capital and government subsidies.
Furthermore, CleanSpark boasts a robust balance sheet, with over $90 million in cash and equivalents, providing it with the flexibility to efficiently expand its mining facilities.
A recent development serving as a short-term catalyst is CleanSpark’s acquisition of 4.4 exahashes per second of the newly introduced S21 Bitcoin mining machines. This aligns with CleanSpark’s comprehensive CapEx roadmap, which aims to boost production and reduce operational costs. Given its healthy cash position, CleanSpark is well-positioned to potentially engage in an accelerated acquisition spree once economic conditions stabilize.
With a price-to-earnings ratio of 11.4x, CLSK stock presents an enticing opportunity, especially considering the firm’s growth phase. While there is a risk of mean-reversion following the stock’s more than 90% year-to-date surge, the long-term growth prospects appear robust, making it one of the top blockchain stocks in my opinion.
HIVE Digital Technologies (HIVE)
HIVE Digital Technologies (HIVE) is another standout in the world of blockchain stocks. This infrastructure provider is recognized for its best-in-class hardware and has established a strong presence in both North America and Europe. By positioning itself as an upstream provider for various sectors, including Web3, AI, and high-performance computing, HIVE is poised for substantial long-term growth.
To support the idea of its continuous growth, HIVE’s first-quarter results, released in August, revealed impressive performance. The company generated $23.6 million in revenue, marking a $5.4 million increase from the previous quarter. From an operational standpoint, HIVE achieved a 5% quarter-over-quarter and a 1.58% year-over-year production increase, driven primarily by its expanded fleet of ASIC mining machines. It’s worth noting that while the firm’s financial performance may not have reached the peaks of the previous year, the cyclical nature of the industry is an important aspect of this high-growth company.
Furthermore, HIVE boasts a robust balance sheet with a current ratio of 3.12, providing it with a strong financial position. Even in the face of lower Bitcoin prices, the company maintains a healthy gross profit margin of 34%. This ability to withstand short-term economic fluctuations positions HIVE to capitalize on expansionary economic environments.
HIVE is classified as a growth stock, with a price-to-cash flow ratio of only 5.46x. This is a remarkable figure, particularly when considering that it trades at a 69% discount to the sector median. Given its core strengths, HIVE stands as one of the top blockchain stocks, at least in my assessment.
Marathon Digital Holdings Inc (MARA)
Marathon Digital Holdings Inc (MARA), a significant Bitcoin mining company, recently published its September performance data, revealing a noteworthy 16% month-over-month increase. However, despite this positive data, the stock (MARA) has experienced a substantial decline, losing over 15% of its value, primarily due to a bearish rating from J.P. Morgan and other concerns in the market.
Despite the stock’s significant loss, I maintain a positive outlook on MARA. The company’s fundamental indicators are showing signs of alignment, marked by an impressive 314% increase in production during the second quarter of the year. Additionally, the company has taken steps to reduce its debt by 56% earlier in the year through a successful $417 million convertible bond conversion with its investors.
In conclusion, I consider MARA stock a strong buy, taking into account its attractive price-to-cash flow ratio of 9.68 and the overall positive fundamental outlook.
PayPal (PYPL)
PayPal (PYPL) has recently found itself trading at a six-year low on the NASDAQ, even dipping below its pre-pandemic levels.
Despite possessing strong fundamentals, PYPL stock has endured a substantial decline, with a year-over-year drawdown exceeding 30%. Nevertheless, I find it worth considering for investors who see potential in undervalued assets, as I do.
In August, PayPal unveiled its second-quarter financial results. The company reported an impressive $1.1 billion in operating income, reflecting a robust 48% year-over-year increase. However, the stock price has not reflected this positive performance. The quarterly results were bolstered by the addition of 2 million net active accounts, a 12% rise in active account transactions, and an 11% increase in total payment values. This highlights PayPal’s enduring value proposition and its resilience in the face of a challenging U.S. consumer environment.
Additionally, PayPal has made strides in the blockchain arena by announcing the creation of its U.S. dollar-backed stablecoin, called PayPalUSD. This move underscores PayPal’s commitment to expanding its presence in the blockchain industry and opens the door to potential organic growth.
In terms of valuation, PYPL stock boasts a respectable price-to-earnings ratio of 15.63x, especially when considering the company’s recent earnings growth. Moreover, the stock is trading below its 10-day, 50-day, 100-day, and 200-day moving averages, suggesting a possible technical buying opportunity.
It is my belief that PayPal is currently one of the top blockchain stocks available for investment.
Bitfarms Ltd (BITF)
Bitfarms Ltd (BITF) is a globally active, vertically integrated Bitcoin mining company that operates 11 farms and houses over 62,000 miners across four countries. The company has demonstrated impressive financial performance, with revenue reaching $35 million in its most recent financial quarter. Notably, Bitfarms boasts an exceptionally efficient cost structure, maintaining a gross mining margin of 42%. This strong foundation makes it an attractive prospect for investors, and a closer look at its fundamentals reveals why.
During the second quarter, Bitfarms reported adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $7.7 million, representing a substantial 16.66% year-over-year increase. This is a remarkable achievement, especially considering the rising costs associated with mining due to higher hash rates and increased energy expenses. Furthermore, Bitfarms’ capital structure is poised to improve in the coming year as its longest-maturity debt obligations are set to mature in February 2024. This provides an opportunity for the company to refinance at potentially lower interest rates, taking advantage of potential shifts in interest rates in North America.
Taking a qualitative perspective, Bitfarms is expected to experience a surge in production in the coming years. The company is actively expanding its production capacity, with various facility developments in progress. Notably, the Peso Pe sub-station in Paraguay is expected to contribute significantly, delivering 50 megawatts, with 30 megawatts dedicated to an air-cooled warehouse and 20 megawatts to a container layout. These developments enhance the company’s implied earnings capacity, opening the door to exponential earnings growth.
BITF stock presents an enticing valuation proposition. With a price-to-sales ratio of 1.78x, it trades at a 30.27% discount compared to the sector median. This implies that Bitfarms is one of the blockchain stocks offering relative value to potential investors.
Applied Digital Corporation (APLD)
Applied Digital Corporation (APLD) is a data center developer and operator, with its NASDAQ-listed stock showing an impressive surge of approximately 160% since the beginning of the year.
While investing in APLD might be considered a risky proposition, it offers a compelling value proposition due to its strategic position in the industry value chain. As a developer, the company operates in a sector with high barriers to entry, which positions it favorably to dominate the market.
Moreover, the company’s first-quarter results underscore its strong performance and long-term growth potential. APLD reported $36.3 million in revenue, marking a remarkable 65% sequential growth. Additionally, the achievement of an adjusted EBITDA of $10 million demonstrates a clear path to profitability.
From a relative valuation perspective, APLD’s stock appears well-placed. For instance, its price-to-sales ratio stands at 1.46x, which is 41.5% lower than the sector median. Furthermore, the stock is trading below its 10-day, 50-day, 100-day, and 200-day moving averages, suggesting a technical buying opportunity may be present.
Block, Inc. (SQ)
Block, Inc. (SQ), as per Jason Kupferberg of Bank of America, has experienced a more than 30% year-to-date drawdown, which he considers an unjustified correction. Kupferberg argues that Block’s growth profile justifies higher price multiples, even though declining consumer demand has impacted Block’s gross profit margin.
My perspective has evolved over the past year, and I now find myself in agreement with Kupferberg. This shift in outlook is influenced by the recovery of higher beta stocks and the current more reasonable price level for SQ stock.
In its latest fiscal quarter, Block demonstrated strong performance. The company reported second-quarter revenue of $5.53 billion, marking a 25.4% year-over-year increase. Notably, the results indicated robust momentum from Cash App, which achieved a 35.8% year-over-year growth, contributing to total revenue of $3.56 billion. Furthermore, Block has raised its guidance, anticipating that its earnings before interest, tax, depreciation, and amortization will reach $1.5 billion, up from the previous estimate of $1.36 billion.
While concerns persist about declining U.S. consumer sentiment, Block’s overall trajectory appears positive. This suggests that its price-to-sales ratio of 1.36x represents a justifiable valuation.
Disclaimer:
The information presented in this article is for informational purposes only and should not be considered as financial or investment advice. Any investment decisions should be made after consulting with a qualified financial advisor and considering your unique financial situation and risk tolerance. Investing in stocks carries inherent risks, and past performance is not indicative of future results. The author and the website are not responsible for any investment decisions or actions taken by readers based on the information provided.
