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2 Potentially Explosive Crypto Stocks to Buy in April
The cryptocurrency market cooled in 2022 as rising interest rates, regulatory challenges, and other macroeconomic headwinds pushed investors toward more conservative investments. But over the past year, the cryptocurrency market has heated up again as the U.S. Securities and Exchange Commission (SEC) approved the first spot price Bitcoin Exchange-traded funds (ETFs) and investors have been eagerly awaiting lower interest rates.
The upcoming Bitcoin halving, which will reduce rewards for mining the cryptocurrency; network upgrades for the Ethereum The network and more institutional buying of cryptocurrencies also brought back more bulls.
Image source: Getty Images.
The easiest way to take advantage of market growth is to buy directly The main cryptocurrencies like Bitcoin and Ethereum on a cryptocurrency exchange. But it is always wise to invest in a few promising cryptocurrency companies that will benefit from the same tailwinds. I believe Digital Marathon (NASDAQ: MARA) and Coinbase Global (NASDAQ:COIN) check all the right boxes.
1. Digital marathon
Marathon Digital is the largest Bitcoin miner in North America. It minted 12,852 Bitcoin in 2023, a 210% increase from 2022. As of the end of March, it held 17,381 Bitcoin in its $1.6 billion in Bitcoin and cash.
Marathon’s mining operations in North Dakota were impacted by adverse weather conditions in the first quarter of 2024. But the company plans to address these issues by moving some of its miners from North Dakota to Texas and energizing thousands of new miners. After making these changes, it expects its operational fleet to reach 235,000 miners with a total production capacity of 29.8 exahashes per second (EH/s) this year. By comparison, Marathon’s closest competitor, Riot Control Platformsended March with 112,944 miners, a production capacity of 8.6 EH/s and only 8,490 Bitcoins on its balance sheet.
Marathon’s lead over Riot is expected to grow as the company opens new factories, acquires smaller miners, and expands its new mining joint venture in Abu Dhabi. Marathon also periodically sells its own bitcoin to raise more cash and support these expansion plans.
Analysts expect Marathon’s revenue to grow at a compound annual growth rate (CAGR) of 35% between 2023 and 2026. They expect its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to grow at a slower 1% CAGR as it ramps up spending to expand its business, but its shares still appear reasonably valued at 6 times this year’s sales and 13 times adjusted EBITDA.
2. Coinbase Global
Coinbase is one of the world’s largest cryptocurrency exchanges. It held $101 billion in assets under its custody as of the end of 2023 and was chosen as the custodian for eight of the 11 new Bitcoin spot price ETFs that went public earlier this year. It has also thrived while many of its peers in the sector have collapsed.
The story continues
Coinbase’s total trading volume declined 44% in 2023, but it still improved sequentially in the third and fourth quarters as the cryptocurrency market heated up again. It also generated more of its trading revenue from Attached stablecoin – which accounted for 11% of its trading volume in 2023 – and the move could reduce its long-term reliance on Bitcoin, Ethereum and its other more volatile crypto assets.
Between 2023 and 2026, analysts expect Coinbase’s revenue to grow at a CAGR of 21% while its adjusted EBITDA will grow at a CAGR of 40%. Based on these estimates, its stock is trading at 10 times this year’s sales and 24 times its adjusted EBITDA.
Coinbase stock isn’t a bargain yet, but it could still have plenty of room to grow as the cryptocurrency market matures. That’s why Ark Invest’s Cathie Wood—who believes Bitcoin can hit $1.5 million in the next three years—calls Coinbase a top holding among several of Ark Invest’s most popular ETFs. If you think cryptocurrencies will gain more attention from retail and institutional investors, you should follow Ark’s lead and buy a few shares of Coinbase.
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Sun Leo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
2 Potentially Explosive Crypto Stocks to Buy in April was originally published by The Motley Fool