Many investors get turned off when they hear the words blockchain or cryptocurrencies. Aside from the crypto majors like Bitcoin and Ethereum, many people associate the industry with fraud and rug pulls. The industry has not built itself exactly the best reputation. However, blockchain technology and applications are incredibly complex and potentially lucrative.
The blockchain is a transparent and accurate digital ledger that is self-sustaining and does not require human intervention. This means that any transaction that takes place on the blockchain will be recorded and kept forever. Due to its decentralized structure, blockchain developments have disrupted the fintech space by promising secure transactions, reduced compliance costs and efficient data processing.
Wall Street is coming around on the technology. This year, the SEC approved spot Bitcoin and Ethereum ETFs trading in the United States. But, if you’re still on the fence, here are three top blockchain stocks to buy now that we think can change your mind.
Coinbase (COIN)
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If there is one company that provides exposure to the entire crypto and blockchain landscape, it is Coinbase (NASDAQ:COIN). Analysts agree that Coinbase is a clear leader and a blockchain stock to buy now. Even after a blowout quarter and gaining 55% year-to-date, the average analyst price target still sits at $263.84. The high end of the price target range has been bumped to $450, implying a nearly 100% upside still to come.
What has analysts so bullish on Coinbase? It’s the largest and most accessible centralized crypto exchange in the United States. Additionally, Coinbase has been undergoing aggressive expansion into international markets and has recently brought its global user base to over 100 million users across more than 100 countries worldwide. In particular, its blockchain, Base, a platform to trade NFTs, meme coins, and even build a Web3 business, has become backed by supporters who believe in its potential to significantly impact the future crypto-economy.
COIN shares are trading at 34x forward earnings, down from 222x forward earnings just last quarter. In spite of its growing revenue and profitability, Coinbase’s price-to-sales valuation has also dipped to a more moderate 16.2x. In our eyes, Coinbase is a non-brainer blockchain stock to buy and own for this crypto bull run.
CleanSpark (CLSK)
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Another area of the blockchain sector worth considering is Bitcoin mining stocks. CleanSpark (NASDAQ:CLSK) is considered one of the leaders in this space, and Wall Street agrees. Analysts have an average price target of $26.40 for CLSK, indicating more than a 45% upside from today’s price.
What makes CleanSpark a leader in the Bitcoin mining and blockchain industry? The company specializes in investing in renewable energy sources to mine Bitcoin. After all, one of the main arguments against the proof-of-work consensus mechanism is that it uses a lot of electricity. Now that CleanSpark has arrived with the promise of more environmentally friendly Bitcoin mining, it has even caught the attention of Republican presidential candidate Donald Trump, who recently met with CLSK executives to discuss the future of crypto mining in America.
As for the stock, CleanSpark has already gained more than 60% in 2024. It trades at about 10.2x sales, right around its industry median and slightly higher than its five-year average of 8.6x sales. Investors should consider buying this revolutionary blockchain competitor as the valuation settles following its pop last week.
Block (SQ)
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Another company dabbling in Bitcoin mining and services is Block (NYSE:SQ). CEO Jack Dorsey has always had an affinity for Bitcoin, and Block was one of the first companies to introduce mass use of Bitcoin through its Cash App. Yahoo Finance analysts project a one-year average price target of $91.09, roughly 50% above its current price!
In April, Dorsey announced that Block had completed its design of a 3-nanometer Bitcoin mining chip. This means Block can now roll out its Bitcoin mining system for public purchase. As Block’s goal of making Bitcoin mining accessible to everyone comes to fruition, there’s no doubt the company will also grab the lion’s share of public sentiment. While the “leading global semiconductor foundry” that Block is working with has yet to be unveiled, this synergy will undoubtedly bring huge economies of scale for both companies.
Block’s stock also looks enticing for its valuation. Shares are trading at 1.5x forward sales, well below the company’s five-year average of 5.5x forward sales. The company has also improved and stabilized its cash flow and is now trading at 16x forward cash flow! Block’s stock remains cheap for a company on the precipice of producing what could be an industry-changing product in the blockchain space.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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