News
2 Potentially Explosive Crypto Stocks to Buy in April
The cryptocurrency market cooled in 2022 as rising interest rates, regulatory challenges and other macroeconomic headwinds pushed investors toward more conservative investments. But in the last year, the cryptocurrency market heated up again as the US Securities and Exchange Commission (SEC) approved the first spot price Bitcoin exchange-traded funds (ETFs) and investors were anxiously awaiting lower interest rates.
The upcoming “halving” of Bitcoin, which will reduce earnings for mining the cryptocurrency; network updates for Ethereum Net; and institutional purchases of cryptocurrencies have also brought back more bulls.
Image source: Getty Images.
The easiest way to profit from market growth is to buy directly the best cryptocurrencies like Bitcoin and Ethereum on a cryptocurrency exchange. But it’s still smart to invest in some promising crypto companies that will benefit from the same tailwinds. I believe Digital marathon (NASDAQ: MARA) e Global Coinbase (NASDAQ:COIN) checks all the right boxes.
1. Digital marathon
Marathon Digital is the largest pure-play Bitcoin miner in North America. It minted 12,852 Bitcoins in 2023, a 210% increase over 2022. As of the end of March, it held 17,381 Bitcoins amid its total $1.6 billion in Bitcoins and cash.
Marathon’s mining operations in North Dakota were hit by severe weather in the first quarter of 2024. But it plans to fix those problems by moving some of its miners from North Dakota to Texas and energizing thousands of new miners. After making those changes, it expects its operational fleet to grow to 235,000 miners this year with a total production capacity of 29.8 exahash per second (EH/s). In comparison, Marathon’s closest competitor, Riot control platformsit ended March with 112,944 miners, a production capacity of 8.6 EH/s and only 8,490 Bitcoins on the balance sheet.
Marathon’s lead over Riot is expected to widen as it opens new plants, acquires smaller miners and expands its new mining joint venture in Abu Dhabi. It also periodically sells its Bitcoin to raise more money and support expansion plans.
Analysts expect Marathon’s revenue to grow at a compound annual growth rate (CAGR) of 35% from 2023 to 2026. They expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will grow at a slower 1% CAGR as it ramps up spending to scale its business, but its shares still appear reasonably valued at 6 times this year’s sales and 13 times its adjusted EBITDA.
2. Global Coinbase
Coinbase is one of the largest cryptocurrency exchanges in the world. It held $101 billion in assets under custody at the end of 2023 and was chosen as the custodian of eight of 11 new Bitcoin spot price ETFs made public earlier this year. It has flourished even as many of its industry competitors have collapsed.
The story continues
Coinbase’s total trading volume declined 44% in 2023, but still improved sequentially in the third and fourth quarters as the cryptocurrency market heated up again. It also generated a larger portion of its business revenue from Bind stablecoin – which accounted for 11% of its trading volume in 2023 – and this change could reduce its long-term dependence on Bitcoin, Ethereum and other more volatile crypto assets.
From 2023 to 2026, analysts expect Coinbase’s revenue to grow at a CAGR of 21% while its adjusted EBITDA will increase at a CAGR of 40%. Based on those estimates, its shares trade at 10 times this year’s sales and 24 times its adjusted EBITDA.
Coinbase stock isn’t a screaming bargain yet, but it could still have plenty of room to run as the cryptocurrency market expands. That’s why Ark Invest’s Cathie Wood, who believes Bitcoin’s price could reach $1.5 million within the next three years, sees Coinbase as a top holding in many of Ark Invest’s most popular ETFs. If you think cryptocurrencies will get more attention from retail and institutional investors, you should follow Ark’s lead and pick up some Coinbase shares.
Should You Invest $1,000 in Marathon Digital Right Now?
Before you buy Marathon Digital stock, consider this:
The analyst team at Motley Fool Stock Advisor has just identified what they believe is the 10 best stocks for investors to buy now… and Marathon Digital wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow, successful model that includes guidance on building a portfolio, regular updates from analysts, and two new stock picks every month. The stock advisory service has more than tripled the return of the S&P 500 Index since 2002*.
*Equity advisor will return starting April 8, 2024
Leo Sun has no position in any of the securities mentioned. The Motley Fool has positions and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
2 Potentially Explosive Crypto Stocks to Buy in April was originally published by The Motley Fool