Most investors might regard blockchain as merely the technology behind Bitcoin (CCC:BTC-USD) and other cryptocurrencies. They often don’t have a thorough understanding of the technology or the best ways to invest in this potentially lucrative trend. We are witnessing attractive opportunities that continue to emerge in many industries as a result of this disruptive technology. Therefore today, I will discuss seven of the best blockchain stocks to buy for investors who want to have exposure to blockchain technology as well as cryptocurrencies.
According to a new report by Grand View Research, the global blockchain market is expected to reach almost $395 billion by 2028. Many publicly traded companies have already incorporated the technology into their operations. While some are exclusively focused on blockchain innovation and cryptocurrencies, others use blockchain-related products and services to complement or facilitate an already successful business.
For instance, the blockchain technology is poised to shape the banking sector by generating a new age of efficiency in the industry. Fintech companies continue to lead the world in overall blockchain adoption trends.
Even businesses in the retail industry are searching for ways to utilize blockchain technology for the flawless execution of business transactions, logistics, and and supply chains.
With that in mind, here’s a list of seven best blockchain stocks to buy for investors who want to invest in blockchain technology.
- Advanced Micro Devices (NASDAQ:AMD)
- CME Group (NASDAQ:CME)
- DocuSign (NASDAQ:DOCU)
- International Business Machines (NYSE:IBM)
- Paypal Holdings (NASDAQ:PYPL)
- Roundhill Ball Metaverse ETF (NYSEARCA:METV)
- Siren NASDAQ NexGen Economy ETF (NASDAQ:BLCN)
Blockchain Stocks: Advanced Micro Devices (AMD)
52-week range: $72.50–$122.48
The first of our blockchain stocks, Santa Clara, California-based Advanced Micro Devices, designs and produces microprocessors for the computer and consumer electronics industries. Once the underdog in the chip sector, AMD has become a leading player in the industry, constantly gaining market share, especially at the expense of Intel (NASDAQ:INTC).
AMD released second-quarter financials in late July. Revenue almost doubled year-over-year (YOY) to $3.85 billion. Non-GAAP net income was $778 million, or 63 cents per diluted share (EPS), representing an impressive 260% improvement YOY. Free cash flow stood at $888 million, a record for the company and up exponentially from $152 million in the prior-year quarter.
On the results, CEO Lisa Su remarked, “Our business performed exceptionally well in the second quarter as revenue and operating margin doubled and profitability more than tripled year-over-year. We are growing significantly faster than the market with strong demand across all of our businesses.”
Second-quarter results outpaced Wall Street’s expectations. AMD indicated rising processor sales and higher average selling prices as key factors for the better-than-expected results. Increasing gross profit margin provided a significant boost to the bottom line.
Management downplayed the current shortages in the semiconductor industry, saying AMD should continue to gain market share for the rest of 2021. Into the third quarter, AMD is forecasting revenues of around $4.1 billion, which represents 46% growth YOY.
Following the results, AMD stock price surged 15% over the past few days. It hit an all-time high (ATH) today, and is up almost 31% year-to-date (YTD). AMD shares currently trade at nearly 48 times forward earnings and 10.2 times current sales. Interested investors could buy the dips in the stock.
CME Group (CME)
52-week range: $146.89- $221.82
Dividend yield: 1.7%
Chicago-based CME Group is among the leading derivatives marketplaces worldwide. It comprises four exchanges, CME, CBOT, NYMEX and COMEX. As most InvestorPlace.com readers would be familiar, each exchange offers a wide range of global benchmarks across major asset classes, such as equities, fixed-income, and alternatives, including cryptocurrencies.
The company announced Q2 figures at the end of July. Revenue came in at $1.2 billion, flat YOY. Adjusted net income stood at $589 million. Adjusted earnings per share of $1.64 was also flat YOY compared to $1.63 in the prior-year quarter.
CEO Terry Duffy cited, “Average daily volume grew by 5% during Q2, led by double-digit, year-over-year increases in our Interest Rates, Agricultural and Options markets.”
CME’s second-quarter earnings were above market expectations, driven by lower expenses, as well as an increase in hedging and micro futures that attracted retail interest. Trading volume for interest rate futures and agricultural futures both surged nearly 25% YOY.
Aimed at smaller active traders, CME has recently rolled out micro-futures that are a fraction of the size of regular contracts. For example, micro WTI crude oil contracts are one-tenth as big as their benchmark WTI futures contract. Additionally, CME has also launched micro Bitcoin futures, which are worth one-tenth of a Bitcoin, compared to regular contracts worth five Bitcoins. More than 100,000 micro Bitcoin futures were traded within six days of the contract’s launch.
CME stock hovers at $210, trading only 6% below its record high in early June. So far this year, CME stock is up around 15% YTD. Forward price-to-earnings (P/E) and current price-to-sales (P/S) ratios are 31.25 and 16.45, respectively.
Blockchain Stocks: DocuSign (DOCU)
52-week range: $179.49- $310.51
San Francisco-based DocuSign is well-known for its e-signature technology. Many enterprises and individuals use its platform to prepare, sign and manage agreements. It is now possible to sign electronically on practically any device at any time of the day.
DocuSign released Q1 figures in early June. Revenue stood at $469 million, an increase of 58% YOY. Non-GAAP net income per share was 44 cents, compared to 12 cents in the prior-year quarter. In addition, the company reported free cash flow of $123 million, up from $32.8 million in the same period last year.
CEO Dan Springer remarked, “We’ve increasingly become the way people agree in this emerging anywhere economy.” He also noted that DocuSign’s new and existing clients were “adopting and expanding at record rates.”
DocuSign is growing rapidly, primarily due to aggressive innovation in its Contract AI platform, which aims to minimize risk for companies negotiating multiple agreements. It uses machine learning to identify specific issues in legal documents. Meanwhile, DocuSign Insight allows users to manage comprehensive searches of legal contracts for specific clauses. DocuSign Analyzer helps to analyze the existence or absence of specific points of interest in legal documents.
While DocuSign has been struggling to generate a profit, it was able to triple full-year revenue between fiscal 2018 and 2021. The company seems to be extending its momentum in the current year. DOCU stock recently hit a 52-week high of $310.51 on July 22. It currently hovers around $296, up 33% YTD. Forward P/E and current P/S ratios are 185 and 34.6 respectively.
International Business Machines (IBM)
52-week range: $105.92- $152.84
Tech giant IBM provides enterprise-level solutions through two main segments: Cloud & Cognitive Software and Global Business Services. Its products and services extend to artificial intelligence (AI), automation, blockchain, data, and security, among others.
IBM announced Q2 earnings in mid-July. Total revenue increased 3% YOY to $18.7 billion. Net income was $2.1 billion, up 8% YOY. Earnings per diluted share soared 7% YOY to $2.33. The company generated free cash flow of $1.6 billion during the second quarter.
On these metrics, CEO Arvind Krishna stated, “In the second quarter client adoption of our hybrid cloud platform contributed to strong performance in Global Business Services and software and drove improved overall revenue growth. At the same time, we continued to help clients infuse our AI-based technology offerings into their core business workflows.”
IBM is spinning off non-core businesses to focus its efforts on its high-growth cloud-based operations. Total cloud sales were up 13% YOY to $27 billion, led by a 20% increase in cloud services provider Red Hat. Cloud-specific revenue remains a double-digit percentage-growth market for the company.
The divestiture of its managed infrastructure business Kyndryl is expected to be complete by the end of 2021. Afterward, management is likely to focus on its cloud and potentially achieve more robust growth and earnings.
IBM stock is a solid dividend play with its current dividend yield of 4.65%. IBM shares trade slightly above $143. They are up 13% so far this year. Forward P/E and current P/S ratios stand at 13.1 and 1.7, respectively. Investors could consider buying around these levels.
Blockchain Stocks: Paypal Holdings (PYPL)
52-week range: $171.63– $310.16
San Jose, California-based PayPal provides electronic payment solutions to merchants and consumers, with a focus on online transactions. The company also owns Xoom, an international money transfer business, and Venmo, a person-to-person payment platform.
PayPal reported Q2 2021 results in late July. The top line increased 17% YOY to $6.24 billion. Non-GAAP net income was $1.36 billion, or $1.15 per diluted share, representing 8% YOY growth. The group generated $1.31 billion in cash flow from operations, implying a 26% YOY decline.
CEO Dan Schulman cited, “Our platform now supports 403 million active accounts, with an annualized TPV run rate of approximately $1.25 trillion. Clearly PayPal has evolved into an essential service in the emerging digital economy.”
Paypal is getting ready to reveal its new super app that comprises digital payments, shopping tools, cryptocurrencies, messaging, and more. PayPal and Venmo aim to consolidate various modern banking and financial services into a single mobile app. Despite the heavy investment involved behind the scenes, PayPal still expects adjusted earnings per share to end 2021 up around 21% YOY.
PYPL stock recently hit a record high of $310.16 on July 26. PYPL shares hover around $271, up nearly 16% YTD. In spite of the pullback in the past few days, PYPL stock does not look cheap given its explosive long-term potential. Shares currently trade at 61 times forward earnings and 14.32 times current sales, pointing to a rich valuation level. However, investor appetite for the shares is still strong.
Roundhill Ball Metaverse ETF (METV)
52-Week Range: $14.03 – $15.19
Expense Ratio: 0.75% per year
Our next discussion centers around an exchange-traded fund (ETF) looking at blockchain stocks. The Roundhill Ball Metaverse ETF provides exposure to the “Metaverse,” regarded as a successor to the current Internet, as part of the Fourth Industrial Revolution (FIR).
Recent research highlights, “Things developed in the era of the FIR has three distinctive features: hyperconnectivity, superintelligence, and hyperconvergence. The FIR aims to converge all the information technologies to create a new world called ‘the metaverse,’ which is the combination of the prefix ‘meta (beyond)’ and the word ‘universe’. Hence, the metaverse means ‘a shared virtual space beyond the universe,’ where the FIR and COVID-19 usher the digital natives in.”
METV, which has 50 holdings, tracks the returns of the Ball Metaverse Index. The fund started trading in June 2021 and has around $39 million in assets. In other words, it is a small and young ETF.
In terms of the sub-sectoral breakdown, the computer components sector makes up the highest portion with 26.6%, followed by the cloud solutions, gaming platform and consumer electronics sectors with 22.7%, 19% and 8.9%, respectively. The fund’s top 10 holding account for around 43% of all holdings in the fund.
Since inception, the fund is down about 3%. For some readers, METV could be an indirect play on the blockchain economy.
Blockchain Stocks: Siren NASDAQ NexGen Economy ETF (BLCN)
52-Week Range: $32.88 – $53.31
Expense Ratio: 0.68% per year
The Siren NASDAQ NexGen Economy ETF provides exposure to companies that are engaged in developing or using blockchain technologies. BLCN, which has 69 stocks, began trading in January 2018.
More than half of the companies in the BLCN come from the U.S. Next in line are businesses based in Japan (12.9%), followed by China (12.7%), Germany (4.65%), and Canada (3.57%)
The top sectors include technology (43.4%) and financials (35.67%). Holdings of the leading ten names comprise about 20% of BLCN’s net assets, which currently stand around $294 million.
Coinbase Global (NASDAQ:COIN), Square (NYSE:SQ), Advanced Micro Devices, and Germany-based enterprise application software provider SAP (NYSE:SAP) are among the leading blockchain stocks on the roster.
YTD, BLCN is up about 13.7% and saw a record high in March. Long-term investors bullish on the distributed ledger technology could consider investing between $40-$45.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.