With the implosion of cryptocurrencies, several of the best blockchain stocks to buy find themselves on fire sale. However, it’s important to realize the tremendous risks involved. Fundamentally, anything crypto-related are reliant on the actions of the Federal Reserve. Specifically, the central bank’s commitment to a hawkish monetary policy poses problems for risk-on assets.
At the moment, the central bank wants to unwind prior monetary excesses. That’s deflationary (i.e. reduced money supply equals deflation). With fewer dollars chasing after more goods, purchasing power rises. In this scenario, people have an incentive to save dollars rather than spend or invest them. That’s not great for risk-on assets, especially with some of the best blockchain stocks to buy. Moving forward, because of the deflationary approach toward monetary policy, global economies risk recession. Again, that’s deflationary.
Still, if you want to take a shot at crypto-related investments, you might as well consider some of the best blockchain stocks to buy.
|Advanced Micro Devices
While IBM (NYSE:IBM) garners the most attention today for its work in artificial intelligence and cloud-computing services, it also moved into the blockchain. Fundamentally, the blockchain’s main innovation centers on its facilitation of decentralized operations across a distributed platform. In other words, people can function together toward a common goal without trusting each other. The blockchain functions without participants having knowledge of the others’ existence.
Essentially, blockchain features its own economic incentivization based on capitalistic motivation and economic rationality. IBM represents one of the best blockchain stocks to buy because it converts this organic capitalistic ethos toward business operations.
Although Mastercard (NYSE:MA) earned its reputation as one of the gatekeepers of the fiat currency system, it jumped into blockchain, as well. Fundamentally, pivoting toward crypto-related transactional services makes sense for both payment providers and merchants. Increasingly, many businesses actively consider adopting virtual currencies to address booming demand.
Recognizing this trend, Mastercard stepped up to the plate and offered various programs to help everyone in the value chain adopt to distributed decentralized transactions. For instance, the financial services giant offers a crypto card program, enabling blockchain-driven services for everyday purchases. In addition, Mastercard offers consultation services for major enterprises and government agencies regarding blockchain adoption.
Plus, MA stands as one of the best blockchain stocks to buy for astute investors because of its undervalued profile. Specifically, Gurufocus.com calls out excellent strengths in growth and profitability metrics. As well, Mastercard features a return on equity of 144%, ranking better than 99% of its peers. This stat also reflects the high-quality nature of MA stock.
Visa (NYSE:V) is another global fiat financial services powerhouse that pivoted to crypto-driven transactions, thus making it a solid idea for best blockchain stocks to buy. No, neither Visa nor Mastercard shares are likely to make you rich in a short time frame. However, these companies present better probabilities of not leaving you hanging out to dry.
Fundamentally, Visa benefits from emerging generations relationship with wealth. Because Generation Z features no real memory of analog mechanizations, it’s normal for this age cohort to adopt cryptos. In addition, evidence indicates that market fluctuations don’t perturb crypto users broadly as a demographic. This suggests that Visa’s myriad initiatives tied to digital assets will eventually pay off.
Better yet, I’m much more comfortable talking about Visa as one of the best blockchain stocks to buy. If the crypto angle doesn’t work out, guess what? Gurufocus.com labels V stock significantly undervalued. One of the standout metrics for Visa is its return on equity of nearly 40%. This ranks better than 97% of its peers and also indicates that the company represents a high-quality business.
Specializing in graphics processing units or GPUs, Nvidia (NASDAQ:NVDA) made a name for itself in the computer gaming space. No longer an obscure niche for the friendless, gaming represents a rapidly expanding global market. However, Nvidia’s powerful GPUs also come in handy for crypto-mining operations. With many blockchains still utilizing processing-intensive proof-of-work protocols, NVDA offers relevance as one of the best blockchain stocks to buy.
Personally, I’m not involved in crypto mining, preferring instead to speculate on digital assets. However, the general consensus is that Nvidia tends to deliver the best of the best for mining-centric GPUs. For instance, Windowscentral.com noted that the Nvidia GeForce RTX 3090 represents the company’s most powerful GPU from the RTX 30 series to date.
Of course, opinions on the above will vary depending on the individual miner or enterprise. However, what’s not arguable is that as of this writing, Gurufocus.com labels NVDA significantly undervalued. The company features strengths across the board, with a stable balance sheet, excellent growth metrics and outstanding profitability indicators.
Advanced Micro Devices (AMD)
In an effort to spare my inbox from colorful messages, we need to discuss Advanced Micro Devices (NASDAQ:AMD) as one of the best blockchain stocks to buy. For one thing, I can’t show love to rival Nvidia without mentioning Advanced Micro Devices. Otherwise, I may incur some problems. But please note that as one of the biggest names in GPUs, AMD enters this list on merit.
While the consensus might be that Nvidia enjoys a slight edge on AMD in terms of mining performance, the matter is really neck and neck. For instance, Tomshardware.com rates the AMD Radeon RX 5600 XT as one of the best crypto-mining GPUs. And while blockchain networks consider pivoting to the more efficient proof-of-stake protocol, plenty of networks utilize proof of work. Therefore, AMD should enjoy much relevance in the long run.
However, I must bring in some not-so-pleasant news. According to Gurufocus.com, the investment resource warns that AMD presents possible value-trap concerns. Presently, one of the main differences between Nvidia and Advanced Micro is that the latter features a poorer quality of business; that is, AMD has a return on equity of 11.8% versus Nvidia’s 31.8%. Still, AMD does enjoy a strong balance sheet so it might be worth speculating on as one of the best blockchain stocks to buy.
Hive Blockchain (HIVE)
Hive Blockchain Technologies (NASDAQ:HIVE) technically enjoys first-mover status. Per its website, the company uses 100% green energy to mine digital assets. As well, management committed to an environmental, social and governance (ESG) strategy from day one. Ultimately, Hive aims to bridge the gap between blockchain/cryptos to traditional capital markets.
Among the key advantages undergirding HIVE stock is low-cost operations. In addition, Hive’s operations situate in “cool and politically stable jurisdictions (Canada, Sweden & Iceland) with access to low cost green/renewable energy.”
Now, for the not-so-great part. Blockchain miners align with crypto sentiment. There’s no getting around that. Therefore, on a year-to-date basis, HIVE stock slipped almost 75%. If that wasn’t enough, Gurufocus.com labels the underlying business as a possible value trap. Here’s the deal: HIVE represents one of the best blockchain stocks to buy for speculators, I repeat, speculators. It’s a no-pain, no-gain approach. That said, Hive features a surprisingly decent balance sheet so gamblers have that going for them.
Argo Blockchain (ARBK)
Argo Blockchain (NASDAQ:ARBK) champions the use of renewable sources of power to support the growth and development of blockchain technologies, per its website. In addition, the company features 220 megawatts of total mining capacity. Additionally, Argo’s facilities are located in North America, providing jurisdictional and geopolitical stability.
As appealing as these and other attributes are, the reality is that pure-play blockchain firms – even the ones deemed the best blockchain stocks to buy – incurred substantial volatility. Since the beginning of this year, ARBK hemorrhaged over 85% of equity value.
Some of this erosion centers on the increase in the average network difficulty for the underlying cryptos. Unfortunately, this circumstance represents a worst-of-both-worlds scenario: difficulty pings higher while prices drop lower. Thus, Argo must conduct some serious hedging to stay afloat.
As with Hive Blockchain above, ARBK represents a high-risk, high-reward opportunity. Financially, it does feature several intriguing metrics, such as a price-sales ratio of 0.9 that sits well below the industry median ratio of 3 times. Still, only gamblers need to apply here. If that’s not you, you may want to consider the more conservative offerings among the best blockchain stocks to buy.
On the date of publication, Josh Enomoto 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.