Cryptocurrency prices rose after the collapse of the FTX exchange in 2022 exacerbated the so-called "crypto winter". Bitcoin is up more than 150% year-to-date, thanks in large part to optimism about the place of Bitcoin ETFs. . As this year's crypto rally sets the stage for a promising 2024, cryptocurrency-focused stocks NVIDIA ( NVDA ) and Block ( SQ ) could be ideal additions to your watchlist. Continue reading...
The cryptocurrency market has had a rollercoaster ride this year, but it has managed to turn a profit. In early December, the digital currency topped $44,000 for the first time since April last year and is up more than 150% for the year, thanks in large part to optimism surrounding the "Bitcoin exchange-traded fund."
With that in mind, it might be a good idea to add some quality cryptocurrency stocks like NVIDIA Corporation (NVDA) and Block, Inc. To your watchlist. (Zone).
Cryptocurrency prices are recovering from the so-called "crypto winter", which was exacerbated by the collapse of the FTX exchange in 2022. The past year has seen hedge fund collapses, crypto lender defaults, and miner losses mount. , which peaked in November. In 2022 when FTX declared bankruptcy.
As the price of Bitcoin rose more than 150% year-to-date, shares of Coinbase (COIN), MicroStrategy (MSTR), and Grayscale Bitcoin Trust (GBTC), all closely linked to the digital currency, rose more than 300%. . at the price Ethereum, another major cryptocurrency, is up about 85% so far in 2022.
The price of Bitcoin jumped to nearly $43,446.82 yesterday, a big gain for investors who got in earlier this year when the price was around $16,500.
One of the main reasons for Bitcoin's rise this year was the easing of interest rate hikes by the Federal Reserve, which created attractive ground for riskier assets. Cryptocurrency prices are further boosted by the upcoming Bitcoin halving, which happens every four years and is scheduled to take place in May 2024. During the halving, the mining reward is cut in half, limiting the supply of Bitcoins.
The additional buying was fueled by the prospect of the arrival of Bitcoin ETFs in the new year.
This year, several major financial firms, including BlackRock, WisdomTree, Fidelity and others, approached the Securities and Exchange Commission (SEC) seeking approval for a spot Bitcoin ETF. This approval of the first US bitcoin ETF expected in January 2024 will be an important milestone for cryptocurrency investors.
"For ETF investors, this is going to be the best product on the market," said Brian Armor, head of passive strategy research for North America at Morningstar. "All other options today are flawed to varying degrees."
Currently, US investors can buy Bitcoin futures ETFs, which contain Bitcoin futures contracts or agreements to then buy or sell the asset at an agreed price. Where Bitcoin ETFs come from can invest directly in digital assets.
Amid growing optimism in the cryptocurrency space, crypto-focused NVDA and SQ stocks can now be solid additions to your watchlist.
Let's see the main features of these procedures:
NVDA
NVDA provides graphics, computing and networking solutions worldwide. It offers GeForce GPUs for gaming and PC, Quadro/NVIDIA RTX GPUs for enterprise graphics workstations, platforms and data center systems for AI, HPC and accelerated computing, cryptocurrency mining processors and much more. The company serves the gaming, data center and automotive markets.
Cryptocurrency mining requires specialized computers, including graphics processing units. NVDA saw a huge opportunity in this market and increased the production of specialized GPUs for cryptocurrency mining. For example, the NVIDIA GeForce GTX 1070 was very popular among miners for its high hash rate and power efficiency.
On November 13, NVDA announced that it has updated its world-leading AI computing platform with the release of the NVIDIA HGX™ H200. Built on the NVIDIA Hopper™ architecture, the platform features an NVIDIA H200 Tensor Core GPU with extended memory to process large amounts of data for AI generation and high-performance computing workloads.
The NVIDIA H200 is the first GPU to offer HBM3e, faster and larger memory to further accelerate generative AI and large language models while advancing scientific computing for HPC workloads. This new processor, which is optimized for artificial intelligence applications, is expected to expand the company's commercial scope and drive growth.
NVDA's trailing 12-month gross margin and EBITDA margin of 69.85% and 49.39%, respectively, are above the industry averages of 49.14% and 9.25%, respectively. Likewise, the stock's net return of 42.10% over the past 12 months is 1,694.7% higher than the industry average of 2.35%.
On a non-GAAP forward P/E basis, NVDA is trading at 40.18x, which is 59.7% higher than the industry average of 25.16x. Additionally, forward EV/sales multiples of 20.59 and 20.77 and forward P/S multiples of 20.59 and 20.77 are above industry averages of 3.03 and 3.08, respectively.
For the third quarter of 2024, which ended October 29, 2023, NVDA's revenue increased 205.5% year-over-year to $18.12 billion. Gross profit grew 321.8% year-over-year to $13.4 billion. The company's non-GAAP operating profit increased 652.4% to $11.56 billion compared to the prior year.
Additionally, non-GAAP net income and earnings per share were $10.02 billion and $4.02, respectively, an increase of 588.2% and 593.1%, respectively, compared to the prior year, consistent with the prior year. However, as of October 29, 2023, NVDA's current liabilities increased to $9.1 billion from $6.56 billion as of January 29, 2023.
Analysts expect NVDA's fourth-quarter revenue and earnings per share to rise 231.1% and 411.1% year-over-year to $20.03 billion and $4.50, respectively. Additionally, the company has beaten consensus estimates for revenue and EPS in each of the last four quarters, which is impressive.
Shares of NVDA are up 10.4% over the past six months and 252.8% over the past year, ending the last trading session at $495.22.
NVDA's mixed fundamentals are reflected in our POWR ratings. The stock has an overall rating of C, which equates to Neutral in our rating system. Energy ratings are calculated using 118 different factors, each with an optimal weight.
NVDA received an A for growth and a B for quality and feel. However, it rates the value "D". It is ranked No. 28 of 91 stocks in the wireless semiconductor and chip industry.
For other NVDA dynamics and stability ratings, click here.
Block, Inc. (SQ)
SQ is a technology company specializing in financial services. The company's products include Square, which makes commerce and financial services easy and accessible for merchants through an integrated ecosystem of technology solutions; A money application for sending, spending or investing money in stocks or bitcoins; Postal service to connect consumers and businesses; And more
On December 7, Bitkey, a Bitcoin wallet developed by SQ, launched in more than 95 countries, expanding access to self-custody and giving people around the world the ability to easily and securely hold and store their bitcoin.
Bitkey includes a mobile app to facilitate phone transactions, a device to protect savings offline, and a set of recovery tools if customers lose their phone, device, or both. The global launch of a self-monitoring Bitcoin wallet could be a good sign for SQ.
On November 16, SQ's Afterpay, a leading global provider of buy-now-pay-later services, and Rokt, a leading e-commerce technology company, announced a partnership that will enable Afterpay to expand its e-commerce activities. Offering important offers to customers at the time of payment. This creates a more relevant and engaging shopping experience, increasing new sales and increasing customer lifetime value.
SQ's trailing 12 month gross margin of 34.69% is 42.6% lower than the industry average of 60.37%. Additionally, trailing 12-month EBIT margin and net profit margin were negative 1.64% and negative 1.36%, compared to industry averages of 20.95% and 25.21%, respectively.
In terms of EV / sales futures, SQ is trading at 2.22x, which is 29.9% below the industry average of 3.16x. However, the non-GAAP P/E ratio of 41.50 is 284.6% higher than the industry average of 10.79. Additionally, the forecast EV/EBITDA of 28.97x is 141.6% higher than the industry average of 11.99x.
In the third quarter ended September 30, 2023, SQ's bitcoin revenue grew 37.5% year-over-year to $2.42 billion, and net profit was $5.62 billion, up 24.4% year-on-year. Additionally, the company's gross profit rose 21.1% year-over-year to $1.9 billion.
However, the company's operating loss and net loss were $9.91 million and $33.76 million, respectively.
The Street expects SQ's fourth-quarter (ending December 2023) revenue to grow 21.6% year-over-year to $5.65 billion. The company's quarterly earnings per share are expected to rise 160.5% year-over-year. Last year it will be $0.57. Additionally, SQ has beaten consensus earnings estimates in each of the past four quarters.
SQ shares are up 22.8% over the past six months and 34.6% over the past year, ending the last trading session at $79.51.
POWR SQ ratings reflect this mixed view. The stock has an overall rating of C, which equates to Neutral in our rating system.
The stock is rated C for Value and Sentiment. SQ is ranked #64 of 102 stocks in the Financial Services (Corporate) sector.
In addition to the POWR ratings I just highlighted, you can see SQ's quality, momentum, growth, and stability here.
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Shares of NVDA were unchanged in premarket trading on Friday. Year to date, shares of NVDA are up 239.02%, while the S&P 500 is up 26.54% over the same period.
Manjeet's keen interest in the stock market led him to become an investment researcher and financial journalist. Through his fundamental approach to stock market analysis, Manjeet strives to help retail investors understand fundamental factors before making investment decisions.
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Cryptocurrency's recovery after 2023 sets the stage for a promising 2024: StockNews.com has two crypto stocks to watch first.