Blockchain stocks have been gaining traction amid the current cryptocurrency frenzy. Despite the Securities and Exchange Commission’s (SEC) recent discussion and regulatory warning on cryptocurrencies, blockchain technology has proven its value across broader sectors.
Initially developed to serve as a digital public ledger for recording transactions involving Bitcoin (CCC:BTC-USD), blockchain has expanded its presence into other industries, too. According to metrics by Grand View Research, “The global blockchain technology market size was valued at USD 3.67 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 82.4% from 2021 to 2028.”
While financial technology companies naturally lead the pack in blockchain adoption, retail, logistics, and healthcare firms have also started implementing the technology.
With this information, here is a list of seven blockchain stocks to keep on your radar for September:
- ARK Fintech Innovation ETF (NYSEARCA:ARKF)
- CME Group (NASDAQ:CME)
- JPMorgan Chase (NYSE:JPM)
- Marathon Digital Holdings (NASDAQ:MARA)
- Riot Blockchain (NASDAQ:RIOT)
- Silvergate Capital (NYSE:SI)
- Siren NASDAQ NexGen Economy ETF (NASDAQ:BLCN)
Some examples of companies using blockchin include Walmart (NYSE:WMT), which has been collaborating with International Business Machines (NYSE:IBM) to ensure food safety by tracking distribution via blockchain. Starbucks (NASDAQ:SBUX) and Microsoft (NASDAQ:MSFT) have piloted a similar project for coffee suppliers. Meanwhile, MedRec by a team at the Massachusetts Institure for Technology operates a project on the Ethereum (CCC:ETH-USD) blockchain for simultaneous testing with Beth Israel Deaconess Medical Center.
Blockchain Stocks to Buy: ARK Fintech Innovation ETF (ARKF)
52-Week Range: $36.73 — 64.49
Expense Ratio: 0.75% per year
Our first choice today is an exchange-traded fund (ETF). The ARK Fintech Innovation ETF is an actively managed ETF run by fund manager Cathie Wood’s Ark Invest. This ETF mainly focuses on the fintech sector.
ARKF, which started trading in February 2019, currently has 42 holdings. Information technology (IT) leads the sectoral allocation with 38.2%, followed by communication services (22.8%), consumer discretionary (16.3%) and financials (15.6%).
The top ten holdings comprise almost 52% of the net assets of $4 billion. Leading companies include payment services provider Square (NYSE:SQ), Canadian multi-channel commerce platform Shopify (NYSE:SHOP), cryptocurrency exchange Coinbase Global (NASDAQ:COIN), online real estate platform Zillow (NASDAQ:ZG,NASDAQ:Z) and Singapore based internet group Sea (NYSE:SE).
Year-to-date (YTD), ARKF is up over 9% and has returned more than 31% over the past year. The fund hit an all-time-high in mid-February. Yet since then, many of the shares in the ETF have come under pressure. Buy-and-hold investors could consider investing around current levels.
CME Group (CME)
52-week range: $144.85 — $221.82
Dividend yield: 1.8%
Chicago-based CME Group is among the leading derivatives marketplaces worldwide. It comprises four exchanges, CME, CBOT, NYMEX and COMEX. Each of these exchanges offers a wide range of global benchmarks across major asset classes, such as equities, fixed-income, and alternatives, including cryptocurrencies.
The company reported Q2 financial results in late July. Revenue of $1.2 billion was unchanged year-over-year (YOY). Adjusted net income came in at $589 million, up nearly 1% YOY. Adjusted earnings per share (EPS) of $1.64 was flat YOY compared to $1.63 in the prior-year quarter.
CEO Terry Duffy said:
“As economies continued to recover during the first half of the year, trading increased across a majority of our asset classes,” and continued, “Looking ahead, we will continue to support our clients’ evolving trading needs through additional product innovation and the upcoming launch of our joint venture company to provide post-trade services for OTC markets.”
CME’s second-quarter earnings were above market expectations, driven by lower expenses, as well as an increase in hedging and micro-futures that attracted retail interest. Trading volume for interest rate futures and agricultural futures both surged nearly 25% YOY.
For investors interested in trading smaller oil contracts, CME has recently rolled out micro-futures, namely the Micro WTI crude oil contracts. These offer crude oil price exposure at smaller margins as they are only one-tenth the size of their respective benchmark WTI futures contracts.
CME has also launched micro Bitcoin futures, which are worth one-tenth of a Bitcoin, compared to regular contracts worth five Bitcoins. More than one million contracts were traded in less than 2 months following the launch in early May.
So far this year, CME stock has returned around 9%. The company’s consensus forward price-to-earnings (P/E) and current price-to-sales (P/S) ratios are 29.76 and 15.69, respectively. As trading volumes increase, CME shares could continue to profit. Bullish investors should keep the stock on their shopping list with a view to buy the dips.
JPMorgan Chase (JPM)
52-Week Range: $91.38 — $167.44
Dividend Yield: 2.25%
Next up is JPMorgan Chase, one of the leading banks and asset management firms in the world. Its business segments include Consumer & Community Banking, Corporate & Investment Bank (CIB), Commercial Banking and Asset Management.
In addition to diversified banking operations, management is taking steps to become a leading fintech name. Its Digital Innovation Team within the Corporate and Investment Bank (CIB) is helping shape the bank’s digital agenda. Meanwhile the Blockchain Center of Excellence focuses on “blockchain use cases to develop in-house technology and pilot solutions across lines of business.”
JPM released second quarter earnings in mid-July. Revenue came at $31.4 billion, down 7% YoY. Net income came at $11.9 billion versus a net income of $4.7 billion in previous year quarter. Diluted EPS was $3.78 compared to $1.38 in Q2 2020.
Following the announcement, CEO Jamie Dimon stated:
“Our longstanding capital hierarchy remains the same — first and foremost, to invest in and grow our market-leading businesses to support our clients, customers and communities — even in the most difficult of times, second, to pay a sustainable dividend.”
So far in 2021, JPM stock is up more than 25%. The shares trade at 12.47x consensus forward earnings and 4.06x current sales. JPMorgan Chase is a well-positioned, solid dividend-paying company that would not fall behind in digital revolution.
The bank is likely to create significant shareholder value well into the future. A potential decline toward $155 or even below would improve the margin of safety for long-term investors.
Marathon Digital Holdings (MARA)
52-Week Range: $1.48 — $57.75
Las Vegas, Nevada-based Marathon Digital Holdings came to prominence as one of the largest BTC miners stateside. It has recently announced plans to move most operations to a largely carbon-neutral data center in Texas.
Marathon Digital reported strong Q2 financial results in mid-August. Total revenue of $29.3 million implied an increase of 10,147% YOY. Net loss totaled $108.9 million versus a net loss of $2.2 million in the prior-year quarter. Loss of per diluted share came in at $1.09 compared to a loss of 13 cents per diluted share in Q2 2020. Cash and equivalents ended the quarter with $170.6 million. Total liquidity, including cash and bitcoin holdings, was around $366.5 million.
CEO Fred Thiel cited:
“With shipment schedules of our previously purchased miners scheduled to accelerate in the second half of this year, and our mining operations expected to generate 13.3 EH/s in 2022 once fully deployed, we believe we are well positioned to continue the positive trends established in the first half of 2021.”
Marathon minted 654 new bitcoins in Q2 reaching a total of 846 newly minted bitcoins over the first half of 2021. The company is also investing to establish one of the largest bitcoin mining infrastructures in North America.
MARA shares have surged around 294.4% YTD. The company’s forward price-earnings (P/E) and current price-sales (P/S) ratios are 38.31 and 119.62, respectively. Investors interested in both blockchain and BTC-USD should keep the stock on radar and consider buying in below $40.
Riot Blockchain (RIOT)
52-Week Range: $2.35 — $79.50
Castle Rock, Colorado-based Riot Blockchain is another leading American Bitcoin mining company. The company’s portfolio consists of Verady, which offers cryptocurrency accounting and financial reporting, Tesspay, which offers transaction escrow settlement services, and the Canadian cryptocurrency trading platform Coinsquare.
RIOT’s Q2 financial results issued in late-August showed a record mining revenue of $31.5 million, up 1,540% YOY. Net income came in at a record of $19.3 million compared to a net loss of $10.6 million in previous-year quarter. EPS was 22 cents versus a loss of 31 cents per share in Q2 2020. Total cash and Bitcoin stood at $195.4 million.
Management noted, “The average BTC price used to calculate Riot’s second quarter 2021 mining revenues was approximately $46,600.” As of September 7, BTC-USD hovers at $46,500.
RIOT shares currently trade at 28.82x consensus forward earnings and 39.68x current sales. So far this year, the stock is up nearly 115%. Long-term investors who can tolerate short-term price swings could consider investing around the current levels.
Silvergate Capital (SI)
52-Week Range: $13.50 — $187.86
La Jolla, California-based Silvergate Capital is the holding company for Silvergate Bank, which specializes in serving cryptocurrency clients. SI’s offerings include Silvergate Exchange Network (SEN), cash management solutions as well as deposit account services for commercial banking, business lending, and mortgage lending, among others.
Silvergate released Q2 financial results on July 20. Net interest and noninterest income totaled $42.5 million. Net income was $20.9 million, or 80 cents per diluted share, increased 283% YOY and 175.9% YOY, respectively. Cash and equivalents ended the quarter at $4.5 billion compared to $199.4 million in prior-year quarter.
CEO Alan Lane remarked:
“In the second quarter of 2021, we continued to add new customers to the platform, grew network volume to a record $240 billion, and surpassed $10 million of transaction revenue for the first time.”
In May, Silvergate announced a partnership with the Facebook (NASDAQ:FB)-backed Diem Association to launch a stablecoin pegged to the U.S. dollar. The coin is expected to be integrated with Facebook’s digital wallet Novi and remain on the Diem Blockchain.
SI shares have returned around 55% YTD. The company’s consensus forward P/E, P/S and and price-to-book (P/B) ratios stand at 38.61, 20.53 and 3.44, respectively. Interested readers could regard any decline towards $110 or below as a better opportunity to buy into the SI share price.
Siren NASDAQ NexGen Economy ETF (BLCN)
52-Week Range: $32.88 — $53.31
Dividend Yield: 0.64%
Expense Ratio: 0.68% per year
Our final choice for today is another exchange traded fund, namely the Siren NASDAQ NexGen Economy ETF, which provides exposure to companies that develop or blockchain technologies. More than half of the holdings in the portfolio are from the U.S. Then, we see Japanese firms (12.59%), followed by Hong Kong (12.37%), Canada (5.13%) and Germany (4.52%).
BLCN, which started trading in January 2018, currently has 67 stocks. Over 75% of the holdings are large-capitalization (cap) companies, while around 14% are mid-cap, 5.3% are small-cap and 5.5% are micro-cap businesses. The top ten stocks comprise about 20% of BLCN’s net assets of $288 million.
Coinbase Global, Square as well as management and technology consulting group Accenture (NYSE:ACN) and chip darling Advanced Micro Devices (NASDAQ:AMD) are among the leading blockchain stocks on the roster.
So far this year, BLCN is up about 17.7%. The shares saw a record high in March and trade at 24.17x current earnings and 3.3x current book value. Buy-and-hold investors interested in the distributed ledger technology could consider investing around $44.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.