Blockchain stocks are still popular despite Blockchain and decentralization being terms thrown around quite loosely these days. There are numerous reasons behind the popularity of the concepts.
For one, globalization plays a big part as global sharing of human capital is on the rise. Unfortunately, the centralized banking ecosystem isn’t equipped to handle the speed at which globalization occurs. Another reason why blockchain and decentralization are gathering pace stems from the distrust in modern politics, resulting in ordinary citizens seeking self-determination.
Numerous other aspects influencing decentralization can be mentioned in a separate conversation. However, I believe the factors above provide enough substance to outline the potential embedded in the concept.
Despite the rise of decentralization and blockchain, mainstream investment mandates are yet to catch on. As such, I thought it prudent to mention seven blockchain stocks to buy that could play a substantial part in a decentralized world.
Here are seven blockchain stocks that stand out to me.
Blockchain Stocks: Applied Digital Corporation (APLD)
Applied Digital Corp (NASDAQ:APLD) is a data center developer and operator whose stock has surged by approximately 160% since the turn of the year.
Although a risky bet, Applied Digital possesses a strong value proposition due to its positioning in the industry value chain. As a developer, the firm has set itself in a high-barriers-to-entry part of the industry, allowing it to corner the market.
Furthermore, as illustrated by its first quarter results, Applied Digital Corp is on a secular growth trend. The company delivered $36.3 million in revenue, reflecting 65% in sequential growth. Moreover, Applied Digital Corp achieved an adjusted EBITDA of $10 million, illustrating a pathway toward profitability.
The stock is well-placed from a relative valuation perspective. For example, Applied Digital Corp’s price-to-sales ratio of 1.46x is 41.5% lower than the sector median. Moreover, the stock trades below its 10-, 50-, 100-, and 200-day moving averages, implying a technical buying opportunity exists.
Cleanspark Inc. (CLSK)
I added CleanSpark (NASDAQ:CLSK) to the list as it perfectly blends long-term tailwinds and short-term catalysts. From a long-term perspective, the company operates a low-carbon Bitcoin (BTC-USD) mining business model, providing it with a valuable ESG tag. This may allow for benefits such as easier accessibility to capital and government subsidies.
Moreover, the company has a robust balance sheet containing over $90 million in cash & equivalents, providing it with the necessary latitude to scale its facilities en masse.
CleanSpark recently acquired 4.4 exahashes per second of the recently announced S21 Bitcoin mining machines as an example of a short-term catalyst. This forms part of CleanSpark’s comprehensive CapEx roadmap, which strives to enhance output and lower the company’s cost basis. Considering its cash position, I would certainly not put it past CleanSpark to enter an accelerated acquisition spree once the economy stabilizes.
CLSK stock’s price-to-earnings ratio of 11.4x is alluring, given that the firm is in a growth phase. Sure, mean-reversion is a risk after the stock’s more than 90% year-to-date surge. However, long-term growth seems unquestionable. Thus, it is one of the best blockchain stocks, in my opinion.
Blockchain Stocks: HIVE Digital Technologies (HIVE)
Similar to Applied Digital Corp, HIVE (NASDAQ:HIVE) is an infrastructure provider. The company’s hardware is considered best-in-class, with firm representation in North America and Europe. By positioning itself as an upstream provider to domains such as Web3, AI, and high-performance computing, HIVE is capable of embarking on a secular growth trajectory with the velocity that few entities have experienced.
As supporting evidence of my aforementioned secular growth claims, HIVE released its first-quarter results in August, revealing illustrious growth. The firm achieved $23.6 million in revenue, enhancing its topline by $5.4 million from its previous quarter. From an operating point of view, the firm’s production rose by 5% quarter-over-quarter and 1.58% year-over-year, primarily driven by its expanded fleet of ASIC mining machines. Okay, granted, the company’s financial performance remains below last year’s highs. However, I never said that cyclical economic exposure isn’t a salient feature of this hypergrowth company.
Furthermore, HIVE holds a solid balance sheet with a current ratio of 3.12. On top of that, HIVE maintains a gross profit margin of 34% despite weaker Bitcoin prices. As such, the company has the ability to deflect short-term economic turbulence while repositioning to take advantage of expansionary economic environments.
HIVE is a growth stock with a price-to-cash flow ratio of merely 5.46x, which ranks exceptionally, considering its 69% discount to the sector median. Based on its core features, HIVE is one of the best blockchain stocks, at least in my book.
Block, Inc. (SQ)
Jason Kupferberg of Bank of America recently opined on Block’s (NYSE:SQ) more than 30% year-to-date drawdown, stating that it had suffered from an unjustified correction. More specifically, Kupferberg believes Block’s growth profile justifies higher price multiples despite waning consumer demand depleting Block’s gross profit margin.
I would’ve disagreed with Kupferberg if you asked me a year ago. However, my outlook today is much different due to the recovery of higher beta stocks paired with a more realistic price level for SQ stock.
Block made a strong showing in its latest fiscal quarter. The firm achieved $5.53 billion in second-quarter revenue, increasing by 25.4% year-over-year. The results communicated solid momentum from Cash App, which delivered 35.8% year-over-year growth to achieve a cumulative revenue of $3.56 billion. Furthermore, Block boosted its guidance, stating that it anticipates its earnings before interest tax depreciation and amortization to settle at $1.5 billion, up from its previous estimate of $1.36 billion.
Despite glowing fundamentals, PYPL stock has suffered from a significant sell-off, amounting to a more than 30% year-over-year drawdown. Nevertheless, I wanted to throw it into the mix for those investors who believe in investing in beaten-down stocks, like I do.
PayPal released its second-quarter financial results in August. The firm achieved $1.1 billion in operating income, amassing a 48% year-over-year increase, yet its stock price failed to follow suit. Much of the quarterly momentum stemmed from a net 2 million increase in active accounts, a 12% increase in active account transactions, and an 11% increase in total payment values. Therefore, I believe PayPal’s fundamental value-additivity shows no signs of stopping as the company’s latest quarter deflected a soft U.S. consumer environment, illustrating PayPal’s significant value proposition.
Furthermore, PayPal recently announced the release of its own U.S. dollar-backed stablecoin, named PayPalUSD. The move illustrates PayPal’s desire to enhance its footprint in the blockchain arena, concurrently raising the possibility of rejuvenated organic growth.
As for its valuation, PYPL stock’s price-to-earnings ratio of 15.63x is respectable, especially considering the company’s recent earnings momentum. Additionally, PYPL stock is below its 10-, 50-, 100-, and 200-day moving averages, hinting at a technical buying opportunity. I definitely believe it is one of the top blockchain stocks you can buy right now.
Blockchain Stocks: Bitfarms Ltd (BITF)
Bitfarms (NASDAQ:BITF) is a globally operated, vertically integrated Bitcoin mining company with 11 farms and over 62,000 miners. Spanning four countries, the company earns significant revenue, raking in $35 million in its latest financial quarter alone. Furthermore, Bitfarms has an exceptionally efficient cost structure as it runs on a gross mining margin of 42%. Therefore, the face value of this firm dictates that it deserves attention from investors; let’s observe its fundamentals in further detail.
The company’s adjusted earnings before interest tax depreciation and amortization settled at $7.7 million during its second quarter, representing a 16.66% year-over-year increase. This is quite impressive, considering that the cost of mining surged in the period due to higher hash rates and increased energy costs. In addition, the firm’s capital structure may improve in the new year as its longest maturity debt obligations end in February 2024, whereafter it can refinance at lower interest rates, given a potential interest rate pivots in North America.
Furthermore, a qualitative vantage point suggests Bitfarms’ production may surge in the coming years. The company is onboarding a significant amount of production capacity amid the rollout of various facility developments, including the Peso Pe sub-station in Paraguay, which is projected to deliver 50 megawatts to 30 megawatts to an air-cooled warehouse and 20 megawatts to a container layout. Such developments add to the company’s implied earnings capacity, raising the possibility of exponential earnings growth.
BITF stock’s valuation is enticing, to say the least. I say this because its price-to-sales ratio of 1.78x is at a 30.27% sector median discount, implying that this is one of the blockchain stocks with relative value.
Marathons Digital Holdings Inc (MARA)
Bitcoin mega miner Marathon Holdings (NASDAQ:MARA) released its September, revealing a 16% month-over-month increase. However, despite its encouraging data, the MARA stock has shed more than 15% of its value amid a noteworthy bear rating from J.P. Morgan, among other matters.
Despite shedding nearly a third of its value since the start of the year, I am bullish on MARA stock. The asset is supported by a company whose fundamentals are starting to align amid a reported 314% production increase in its second quarter, paired with a 56% debt reduction earlier this year after the company agreed to a $417 million convertible bond conversion with its investors.
In closing, I deem MARA stock a strong buy by intertwining its price-to-cash flow ratio of 9.68 with a fundamental outlook.
On the date of publication, Steve Booyens did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.