Cardano (ADA-USD) isn’t having a good year in 2022. It’s down about 40% through March 6. But, then again, how many are? Even Bitcoin (BTC-USD), the world’s largest cryptocurrency, has lost around 20%.
We’re living in volatile times at the moment. Off the top of my head, I can think of four major issues: a war in Ukraine, Covid-19, record inflation, and rising interest rates. You’d be delusional on the scale of Putin to think ADA-USD shouldn’t be getting banged around.
The reality is that since the end of 2020, Cardano has appreciated by 426%.
How many S&P 500 index companies can make that claim? For that matter, how many U.S.-listed stocks with a market capitalization of $30 billion — Cardano’s recent market cap — can make that claim?
If you’re one of the lucky ones who bought in early 2021, my suggestion is you take enough profits off the table to cover your investment. Then sit back and enjoy the ride.
In the meantime, what should you buy with the profits? I’ll look at a sampling of stocks with a similar market cap to Cardano but aren’t nearly as volatile.
Good Alternative for Your Cardano Profits
My first option is a bit of a contrarian play. Dollar Tree (NASDAQ:DLTR) has a market cap of $31.4 billion, almost identical to Cardano’s. Moreover, DLTR stock has done well over the past year, up 37.3%.
However, the discount retailer is not without warts.
The business is going through a significant change at the moment. In November, it announced that it would raise its baseline prices from $1 to $1.25 for the first time in its history. For those who thought it was a reaction to rampant inflation, they’d be wrong.
“This decision is permanent and is not a reaction to short-term or transitory market conditions,” Fortune reported Michael Witynski, Dollar Tree’s president and CEO in their third quarter earnings report. “[The] Company believes this is the appropriate time to shift away from the constraints of the $1.00 price point in order to continue offering extreme value to customers.”
I live in Canada. Montreal-based Dollarama (OTCMKTS:DLMAF) has been very successful with multiple price points above $1. It wasn’t easy implementing them at first, but the payoff was there for shareholders. Dollarama stock is up 652% since it went public in late 2009 at 17.50 CAD ($13.82).
Dollar Tree reported fourth-quarter 2021 results on March 2. The company’s sales were $7.12 billion, $350 million higher than analyst expectations. On the bottom line, it earned $2.01 a share, 23 cents better than the estimate.
Dollar Tree’s come out of its funk. As a result, I expect big things in the next 12-24 months from its stock.
North of the Border Alternative
A strong energy market got that much more robust with the war in Ukraine. As a result, oil and gas prices are through the roof. One oil and gas company that benefits from higher prices is Calgary-based Cenovus Energy (NYSE:CVE). It has a market cap of $32.0 billion, right in Cardano’s wheelhouse.
On the surface, Cenovus might not look like the best investment at the moment. It reported Q4 2021 earnings in early February. Thanks to a $1.9 billion non-cash impairment charge from its U.S. Manufacturing segment (refining), the company lost 408 million CAD ($322.3 million).
However, its adjusted funds flow from operations was 1.95 billion CAD ($1.54 billion), 485% higher than in Q4 2020. Its adjusted funds flow from operations was 7.25 billion CAD ($5.73 billion) for the entire fiscal year, 6,095% higher than a year earlier.
In 2021, Cenovus paid 23.6 billion CAD ($18.6 billion) to acquire Husky Energy. The acquisition increased its total proved plus probable reserves by 24% to 8.3 billion barrels of oil equivalent. It is now Canada’s third-largest oil and gas producer.
As Hal Holbrook’s character, Lou Mannheim, said in Wall Street, “Kid, you’re on a roll. Enjoy it while it lasts, ‘cause it never does.”
Cenovus is a buy until further notice.
The Bottom Line
In late February, Input-Output (IOHK), the people behind Cardano, updated what it will be up to in 2022. Primarily, it’s focused on scaling the platform to handle the volumes of transactions handled with the introduction of sustainable finance (RealFi) for real people.
I don’t think there’s any doubt that Cardano has the potential to revisit $2 by the end of the year. I’ve stated many times in past articles that it has honest-to-goodness utility. That hasn’t changed.
What has changed is the global economic environment. It’s a tinderbox. Cryptocurrencies, like stocks, have been exceptionally volatile investments. Until Russia stands down, that won’t change. It can’t.
For this reason, I would continue to exercise caution concerning your crypto investments. If you’re in for the long haul, cover your initial cost, and hold on tight.
On the date of publication, Will Ashworth 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.