As the potential of blockchain becomes increasingly apparent across various industries, investors are keen to identify undervalued blockchain stocks that have the potential to deliver substantial returns in the coming years. This has led to my list of blockchain stocks to buy for June this year.
As the blockchain industry continues to mature and gain mainstream adoption, identifying undervalued stocks with strong growth potential becomes more crucial for investors seeking to maximize their returns.
Although there’s great potential in cryptocurrencies such as Bitcoin (BTC-USD), the potential for blockchain technology is immense. I believe that we’ve only started to see the tip of the iceberg when it comes to the transformative power of blockchain. Beyond its applications in cryptocurrencies, blockchain technology has the potential to revolutionize industries.
So here are my three best picks for investors who are interested in tapping into the blockchain industry. These names will not stay this cheap for long, so paying attention to these names today could pay off in spades later on.
IBM (IBM)
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IBM (NYSE:IBM), while not a pure-play blockchain company, it has been actively investing in and developing blockchain solutions for various industries, including supply chain management, financial services and healthcare. It’s known for its hyperledger fabric blockchain solution, which is used by large enterprises.
IBM reported mixed first-quarter results, with adjusted earnings of $1.68 per share beating expectations, but sales of $14.46 billion falling slightly short of analyst estimates. The company also announced plans to acquire cloud-software company HashiCorp for $6.4 billion, a move that complements IBM’s focus on helping enterprise clients and could also synergize with its blockchain ambitions.
IBM is definitely your father’s tech stock, with it being a low beta, stable, dividend aristocrat. Although its dividend growth rate is lower than many others, it complements this with a stable nature and very manageable payout ratio.
IBM would work in a blockchain investors’ portfolio if they value stability above speculative growth.
Riot Platforms (RIOT)
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Riot Platforms (NASDAQ:RIOT) focuses on Bitcoin mining and has significantly expanded its mining operations.
RIOT disclosed that it had approached Bitfarms (NASDAQ:BITF) with a $950 million buyout offer, which was rejected. Riot Platforms, currently the largest shareholder of Bitfarms with a 9.25% stake, offered $2.30 per share to create “the world’s largest publicly-listed bitfarm mining company.”
RIOT and other blockchain companies are the antithesis of IBM’s positioning in the blockchain industry. In order for RIOT to and others to stay afloat, they are making a large gamble on Bitcoin’s future capital appreciation.
Due to the ongoing reduced block rewards and increasing difficulty, it requires Bitcoin to progressively increase in price as time goes on, in order for these companies to turn a profit. It’s a risky business model, but firms like RIOT could skyrocket in value in the future if their long-term thesis plays out as expected, with the mined coins on the balance sheet worth fortunes.
RIOT has an impressive hash rate. It could become one of the world’s most valuable companies on a book value basis if the Bitcoin dream comes alive.
Coinbase (COIN)
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Coinbase (NASDAQ:COIN) reported its second consecutive quarterly profit, with net income reaching $1.17 billion in the first quarter of 2024, the highest in nine quarters. Net revenue also rose by 115% compared to the same period last year, driven by a revival in digital coin trading, largely due to the launch of new bitcoin ETFs in January.
The halving event in April really put Bitcoin’s volatility in overdrive, with the coin surging to a new all-time high not long after. Since then, the Federal Reserve’s indecision to lower rates and geopolitical turmoils have put a cork on its usually parabolic nature.
Still, it has oscillated around the $60,000 to $70,000 mark quickly over the past few weeks, which is ideal trading conditions.
I believe that this year will be a historic one for COIN, as more volatility can naturally be assumed to lead to more trading fee revenue and other subscription products as traders are glued to their screens. If rates lower this year, I believe the conditions are set to see another all-time high being breached as the crypto bull market is firmly in full swing.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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