But that hasn’t been the case for cryptocurrencies like bitcoin. A shift in sentiment catapulted the planet’s largest digital token to an all-time high last week, putting it within a stone’s throw of $ 20,000. Since the start of the year, bitcoin is up 161% through December 1, 2020. That’s about 150 percentage points outperforming the S&P 500.
Still, you won’t find this insane investor buying into the bitcoin hype now or potentially ever. This is because I consider bitcoin to have a number of fundamental flaws.
For example, bitcoin is often touted for its scarcity, as is gold. However, there is a big difference between a commodity that is physically missing and a digital token that is scarce due to the way its computer code was written. We cannot create more gold than we can extract on Earth. By comparison, the crypto community can, in theory, change the code governing Bitcoin’s 21 million token hard cap. In other words, it is a perceived rarity and not an actual rarity.
The biggest beef I have with Bitcoin is the limited utility of the token. Even if it hit $ 20,000, giving its mining supply a value of $ 371.2 billion, it wouldn’t even be remote to have breakthrough transactional potential. About 40% of the 18.56 million bitcoin mined is held tightly by investors and is not in circulation. That leaves maybe $ 223 billion worth of bitcoin in circulation for payments. This represents about a quarter of 1% of global gross domestic product for 2017.
I don’t even agree with the idea of buying digital tokens. The real value of the crypto revolution is the underlying blockchain technology. Buying Bitcoin does not give investors any ownership in the underlying digital ledger that has fueled the cryptocurrency hype for the past decade.
Personally, I would rather buy the following three hyper growth stocks than own bitcoin.
Interestingly, one of the three fast growing stocks that I think can turn the circles around bitcoin is actually a company that generates significant income from the most popular cryptocurrency – Square (NYSE: SQ).
For nearly a decade, Square has acted as a payments facilitator for small businesses. The company’s seller ecosystem provides point-of-sale solutions and analytics tools to help these small businesses thrive. Since this is an operating segment focused on merchant fees, seeing the gross payments volume (GPV) climb from $ 6.5 billion to $ 106.2 billion between 2012 and 2019 has resulted in strong growth in sales and gross margin in this segment.
What’s remarkable about the seller ecosystem is that it has attracted larger companies, on an annualized GPV basis, over the past two years. If bigger merchants embrace Square’s selling platform, the company’s already impressive growth rate could be adjusted even higher.
However, the real draw for investors is the peer-to-peer Cash App payment platform. The monthly number of active users for Cash App more than quadrupled to 30 million between the end of 2017 and June 2020, with around 7 million users adopting Cash Card (a debit card that is linked to the Cash App account of ‘an user). Cash App gives Square the ability to generate income from merchant fees, bank transfers, investments, and bitcoin trading (drumbeat). In fact, Square bought $ 50 million worth of bitcoin this year to help facilitate this growing area of business.
The point is, Square allows investors to profit from the bitcoin hype without being directly exposed to a potentially faulty token.
Another hyper-growing stock that I would much rather buy instead of Bitcoin is the cloud computing company Quickly (NYSE: FSLY). Quickly helps deliver content quickly and securely to end users for its clients.
Although it has lost 40% of its value since reaching an all-time high in mid-October, Fastly’s stock has still more than quadrupled in value since the start of the year. This fourth quarter drop is associated with the company revising its third quarter sales forecast due to reduced usage of TikTok, Fastly’s largest customer (12% of total first quarter sales). semester). This revenue review also came after the Trump administration threatened to block downloads from TikTok in the United States.
While deleveraging its sales to TikTok might sound like bad news, it’s actually a blessing in disguise. Fastly continued to add new customers (96 in the third quarter) and saw the average spend of its corporate customers soar each quarter. The fact is that more and more people are shopping online and the consumption of internet content is on the rise. The COVID-19 pandemic has taken this existing trend and given it a supercharged push. This is great news for Fastly’s content delivery and security solutions.
Investors should also be aware that Fastly doesn’t just choose small businesses as customers. It’s already the preferred edge cloud platform for the likes of Pinterest, Twitter, Shopify, and Airbnb, potentially soon public.
Investors should expect Fastly to double its sales every two to three years this decade.
In the field of health, I believe that telemedicine is the backbone Santé Teladoc (NYSE: TDOC) has what it takes to easily outperform the most popular digital crypto token. Teladoc is also the action that fascinates me the most at the moment.
As you can imagine, he’s received a hell of a boost from the pandemic. In an effort to keep patients infected with the coronavirus out of doctor’s offices and hospitals, as well as to keep people at risk in their homes, we’ve seen a huge increase in virtual visits. In each of the last two quarters, the number of Teladoc virtual tours has more than tripled compared to the previous year. But keep in mind that the company’s compound annual growth rate before the pandemic (2013-2019) was 74%. COVID-19 helped, but the business was growing like a weed long before it hit.
The telemedicine business model also has a number of advantages. It is more convenient for the patient (he does not have to travel) and the doctor (can accommodate more visits). In addition, health insurers generally pay less when patients take a virtual visit, compared to an office visit.
Another centerpiece of the puzzle of Teladoc’s growth story is the recent acquisition of applied health signals company Livongo Health. Livongo collects mountains of data on chronic disease patients and, using artificial intelligence as an aid, sends its registered members tips and advice to help them lead healthier lives. Livongo already has more than 400,000 American diabetics enrolled in its monthly subscription service.
The Teladoc and Livongo association represents the future of personalized care in the United States. With the ability to sell and acquire new customers, Teladoc is expected to continue to be one of the fastest growing healthcare stocks.