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Move Over, Pricey Bitcoin: Invest in These 4 Stocks Instead

Zacks

Bitcoin is touching new highs every week and this morning it reached the historic milestone of $11,000 for the first time. Once considered as a mysterious investment, Bitcoin has gained huge popularity this year, with more and more people expressing their interest in buying the cryptocurrency.

But is it worth buying a digital coin for over $10,000, particularly when it has soared nearly 800% in less than a year? After all, the way it is crafting fresh highs every week, it depicts the very nature of a speculative valuation.

Notable financial market experts have criticized bitcoins with Jamie Dimon, CEO of U.S. banking major JPMorgan Chase & Co., calling it a ‘fraud.’ Although we would refrain from using such harsh words, the sudden spurt surely indicates massive risk.

Hence, we prefer to be cautious as far as investing in bitcoin is concerned despite its massive growth prospects. Instead, we recommend investing in stocks that have a diversified product portfolio, including exposure to cryptocurrencies. Although this strategy will not generate as much returns as bitcoins, it will likely provide a cushion once the bubble bursts.

Smart investors should have a look at NVIDIA Corp. NVDA which makes chips that power cryptocurrency mining. Notably, miners require advanced hardware to smoothly run parallel processing. Hence, they need powerful processors and chips. NVIDIA’s graphics processing units (GPU) are believed to be the best in creating bitcoin.

As NVIDIA is well known for offering more advanced and fast GPUs — it is the first choice of most miners. However, revenues from sales of GPUs related to cryptocurrency, contribute a meager portion to the company’s total revenues.

Therefore, any downfall in the cryptocurrency market will not have any material impact on NVIDIA’s revenues. The company has much more exposure in other fast-growing markets, including artificial intelligence (AI), gaming, datacenter and automotive, which are witnessing tremendous year-over-year growth for the past several quarters.

The Zacks Rank #1 (Strong Buy) stock has rallied 97.4% in the year-to-date (YTD) period, outperforming the industry’s return of 45.9% to which it belongs to. You can see the complete list of today’s Zacks #1 Rank stocks here.



Another pick is Advanced Micro Devices AMD which is also one of the leading manufacturers of GPUs. However, like NVIDIA, Advanced Micro has little exposure in the space and derives majority of its revenues from other fast-growing markets, including AI, gaming, datacenter and automotive. The Zacks Rank #3 (Hold) stock has gained 25.4% in the last year.



Overstock.com, Inc. OSTK is our next choice, which through its subsidiary tZERO, is trying to utilize blockchain technology in the financial markets. Notably, blockchain is a platform on which bitcoin operates. The platform stores a decentralized account of all bitcoin transactions, and is updated by all network users.

However, its main business is e-commerce, which will help the company recover from any drastic fall in the bitcoin market. The Zacks Rank #3 stock has soared 229.2% YTD, outperforming the industry’s gain of 65.1% to which it belongs to.




Investors can also look for Square Inc. SQ, which is a provider of payments and point-of-sale solutions globally. The company has recently announced that it is testing support for bitcoin through its mobile application, Cash App. By adding this feature, it is offering a platform to its users for buying and selling bitcoin.

Analysts believe Square is well capable of handling crypto transactions at the physical point of sale. We anticipate that the increasing acceptance of these payment modes across a wide spectrum of businesses will result in handsome earnings and revenue growth.

However, if there is any downfall in the bitcoin business, the company’s other platform will mitigate most of the loss. This Zacks Rank #3 company has gained 212.2% in the year-to-date (YTD) period, outperforming the industry’s return of 34.9%, to which it belongs to.



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