Note: Post may contain affiliate links.

7 Cryptocurrency Stocks to Buy [Power Your Portfolio with Bitcoin]

Cryptocurrency stocks just had their best year ever with the leading bitcoin fund posting a 292% return, beating the market by 278%!

In this video, I’ll show you how to invest in cryptocurrency stocks and combine that with a portfolio of coins for triple-digit returns. I’ll then reveal seven bitcoin-related companies that benefit from the trend.

We’re building a huge community on YouTube to beat your debt, make more money and start making money work for you. Click over to join us on the channel and start creating the financial future you deserve!

Join the Let’s Talk Money community on YouTube!

Should I Invest in Bitcoin?

Nation, the return of Bitcoin was been absolutely astounding last year, up almost five-fold over the 12 months to a high over $34,000…close to double it’s 2018 peak. And what makes this recent run different from 2018, where the price shattered 68% in a matter of months, it’s not just short-term investors taking a position.

Besides long-time advocates like Stanley Druckenmiller and Paul Tudor Jones, other institutional investors, the portfolio managers that control hundreds of billions in funds, are building a position. Companies too are starting to hold some of their assets in bitcoin. Square moved 1% of its total assets for a $50 million position and business analytics platform MicroStrategy purchased $425 million in coins.

So there is real legitimacy moving into cryptocurrencies and it may not be long before we see wider business adoption of the blockchain technology which is that ultimate validation and would take bitcoin even higher.

How to Invest in Bitcoin Stocks

But like all alternative investments, I think you need a strategy for investing. Putting everything solely in bitcoin sets you up to lose everything in a panic and before you say it can’t happen…did you catch that. One more time, but I don’t want to bring out the PTSD in you long-time bitcoin investors out there.

What you can do instead is break up your bitcoin investment into related investments. So if you have 10% of your total wealth in bitcoin investments; maybe hold a third of that in coins, a third in the bitcoin funds and another third in cryptocurrency stocks.

This gives you direct exposure to the cryptocurrency but also an investment in the companies set to benefit most. These companies have other business segments that can help drive your returns higher, even if the price of bitcoin takes a breather for a while.

We’ll be using stockcard.io to start our search. I love the search feature here, just type in your theme, for example cryptocurrency, and it drops down with not only individual companies but also collections of stocks around that theme. For bitcoin related stocks, it even breaks it down into mining companies and those focused on the hardware.

And we can click through the individual companies to see all the fundamentals including growth, operations, return and valuation, all laid out for easy analysis.

Sign up on Stockcard for free and make stock-picking easy with the research tool I use! Use promo code: bowtienation for an exclusive discount!

Cryptocurrency Stocks to Buy Now

For our cryptocurrency fund, I like the Amplify Transformational Data Sharing ETF, ticker BLOK, and there are a few reasons I picked this one.

The fund invests in companies actively involved in development and use of that blockchain, so not necessarily exposure to bitcoin itself but the driver behind the technology. You can see all the holdings on the company’s website, which is a great way to find and research other cryptocurrency stocks to invest in.

And so there’s going to be some overlap in the fund and the bitcoin-related stocks I’ll highlight but holding the fund as well is going to give you broad diversification across the theme but also a lot of the stocks that maybe you don’t have access to in your country’s market. For example this GMO Internet and Digital Garage, both traded on the Japanese exchange, I can’t invest in them directly but can through the fund.

For direct exposure to the price of Bitcoin, you might try the Grayscale Bitcoin Trust, ticker GBTC, which tracks the coins almost exactly and might be easier than buying bitcoin in a digital wallet. The fund trades just like a stock, so you can do it through any investing site, and at just $35 a share, it’s within anyone’s reach. Another reason though I really like the fund over purchasing bitcoin directly is you can hold this fund in a retirement account and not have to pay taxes on the capital gains when you sell. The IRS is looking to crack down on bitcoin investors this year and it could be a harsh tax bill come April.

So with those two crypto ETFs, you’ve got broad exposure to the blockchain and bitcoin price, now I want to highlight seven cryptocurrency stocks to watch to round out your portfolio.

I’ll highlight these by segments; so bitcoin-related companies in digital payments, hardware, software and mining and let’s start with the payment side.

Bitcoin and the cryptos are methods of digital payment at their core so, outside the blockchain, that’s where it’s going to cause the most change.

Ninety-nine billion Square Inc, ticker SQ, was an early adopter of Bitcoin, allowing users to buy and sell it on the Cash App.

Revenue jumped 140% last quarter, with a lot of that driven by volume in buying and selling coins. It’s not a high-margin part of the business but builds the network effect that is absolutely critical to any platform.

It’s that network effect, the idea that hundreds of millions of users are on the platform and pretty much locked in, that helps the company drive sales in other parts of the business.

The company also made that $50 million investment last year, about 1% of total assets into Bitcoin. Since then, the value of that asset has increased to $113.5 million, which is still only about a tenth the market cap but it’s a nice little markup to the investment.

Shares are terrifically expensive at 303-times on a price-to-earnings basis but only 4.4-times if you consider the companies earnings growth for that PE-to-growth ratio. Still expensive but you’ve got to give this one credit for growth.

PayPal, ticker PYPL, announced in October that it would allow users to buy and sell Bitcoin as well as a few other coins on the platform.

A survey by Mizuho Securities found that 17% of PayPal users had already used the service within a month, upwards of 305 million users, and a driver of that network effect we’re talking about and will be expanding the service to its Venmo app this year.

PayPal is relatively cheaper here at just 88-times on a PE basis…and I can’t believe I’m saying cheaper with that, but also only about 2.3-times on the PE to growth ratio. To tell you the truth, I love PayPal, I use it a LOT to collect from sponsors and pay freelancers. Maybe some of the Square users out there can tell me why they like it better but I think PayPal is a winner on that multi-decade shift to digital payments. PayPal is a toll-road on the digital currency highway that’s just now being build.

The payment providers are probably the least correlated with the price of bitcoin in our list of seven crypto stocks. That’s been a good thing for most of the last year with both stocks outperforming the bitcoin fund up until the November surge in price. It’s just recently that the fund has outperformed with that 272% return versus 245% for Square and 114% for PayPal.

Bitcoin is still a very small part of their business but I think that network effect is important and will become an even bigger driver for both these.

I really like the hardware side of crypto investing because these companies have a lot of other drivers to higher profits besides just the blockchain.

What we’re looking at here are the graphics processing units, the GPUs, that these companies make. These power video game graphics and computing-intensive applications like bitcoin mining and I love the hardware names here because they not only benefit on the growth in mining but a lot of other catalysts as well.

Gaming and artificial intelligence are going to be big demand drivers for the next decade and there’s currently a huge shortage for chips from the boom in Internet of Things devices, so all this even without bitcoin is going to help drive these companies higher.

First here is NVIDIA Corporation, ticker NVDA, the leader in that graphics card segment.

NVIDIA is in all the right segments for growth including gaming and data centers and revenue grew at 56% last quarter compared to the year prior.

The company announced in September it would try to buy chip designer ARM Holdings from Softbank for $40 billion. It’s still up in the air whether regulators in China or elsewhere will try to block the deal but if it happens, it would give NVIDIA a giant advantage in the industry.

Like most of these companies, shares are a little pricey here at 59-times on a PE basis but the company has $10 billion in balance sheet cash against just $7.7 billion in debt, so a strong financial position from which to take advantage of market growth.

Advanced Micro Devices, ticker AMD, is a more diversified bet compared to NVIDIA.

AMD makes the central processing units, CPUs, as well as the GPUs and has a foundry venture for semiconductors with GlobalFoundries. This all means it’s got a greater breadth of products it can leverage and vertical integration…it owns capacity in each stage of the production for what it does.

That makes it less risky compared to NVIDIA because it can fall back on demand for some of these other products outside of GPUs and potentially could have stronger growth if some of these areas rise faster than that GPU demand.

Shares are trading at 89-times on a price-to-earnings basis but recently made an all-stock offer to acquire Xilinx, ticker XLNX, which is only trading at 55-times earnings. The combination is a good one for AMD and actually helps make it a little more attractive on a valuation basis.

And here you see that the two hardware makers have lagged that stellar 674% return in the price of Bitcoin over the last two years but it’s been much more of a steady climb for both. Nvidia has produced a 285% return and AMD 384% over the two years.

Nation, I’ll take a 300% return in two years any day of the week and twice on Sunday and I think these are going to be your best bet against the volatility in bitcoin.

The software side of crypto investing is where we’ve seen the least amount of options but that could all change as companies adopt the blockchain.

Salesforce.com, ticker CRM, is our sole pick here in the software and applications space and a strong lead in what could be the fastest growth in the list.

CEO Marc Benioff is a devout believer in the blockchain for business use and has built it into the company’s features to help businesses use the technology. Over the next decade we could see blockchain touch every industry; healthcare, IT, finance…and Salesforce is going to be there as the early-mover in adoption with the tools companies need to implement it all.

Another driver for the company, it’s acquisition of Slack gives it a market in the work-from-home shift, and management believes it can hit $50 billion in sales by 2026…that would be growth of 147% from the last four quarters’ revenue.

Shares trade for about 50-times earnings but this is one of the few that hasn’t outrun analysts targets. The average analyst target of $235 per share is still 7% above the current price.

Salesforce could be the best value in the list of crypto stocks, only up 32% in the last year against that run in the Bitcoin. As an early adopter of the business use for blockchain though, this could be the best long-term play you make.

Crypto mining stocks are going to be smaller and more directly exposed to the price of coins but could also be some great returns.

Mining companies own the infrastructure for production so that supports share prices even in a BTC selloff. As long as the price of a coin doesn’t fall below the costs like electricity and capex, then the miners can be profitable, especially the ones that do it at scale.

Our first miner is $293 million Hut 8 Mining, ticker HUTMF in the U.S. and HUT on the Canadian exchange.

Hut 8 uses 103 megawatts of installed power to mine Bitcoin at its Medicine Hat and Drumheller locations. The company just closed an $8.3 million CAD financing round in June to upgrade equipment for three miner machines.

The company reported total debt of $20 million against $8.7 million in balance sheet cash last August, along with $36.8 million in digital assets. With the price of Bitcoin rising almost three-fold in that time, it’s no wonder shares have jumped.

About twice the size of Hut 8 by market cap is Marathon Patent Group, ticker MARA on the Nasdaq.

Marathon operates out of Hardin, Montana with a maximum capacity of 105 megawatts as well as a miner at a co-hosted facility in North Dakota. Of the two miners, Marathon looks like it has the most growth potential with the expectation to grow daily Bitcoin production from two coins a day to as high as 20 by the fourth quarter. It’s also just closed a $200 million capital raise to expand into a new facility and has a great partnership with Beowulf Energy for low-cost energy.

Here we see the performance of the two bitcoin miners against the bitcoin fund, an amazing outperformance by Marathon while Hut 8 has really only followed the crypto price so I would want to look into the financials to see why management isn’t leveraging its return.

Sign up on Stockcard for free and make stock-picking easy with the research tool I use! Use promo code: bowtienation for an exclusive discount!

Cryptocurrency stocks and Bitcoin are booming. Don’t miss out on this type of investment for high returns. Learn how to pick crypto stocks and get started!

Speak Your Mind

*