These companies benefit from blockchain technology.
Many investors are familiar with blockchain as the underlying technology that provides security and transparency for Bitcoin and other cryptocurrencies. But blockchain technology has a number of major applications outside of crypto, including finance, international payments, auditing and regulatory compliance. A growing number of public companies specialize in blockchain technology, have incorporated blockchain into their businesses or benefit from the top cryptocurrencies running on blockchains. Unfortunately, many crypto pure plays are extremely exposed to the highly volatile cryptocurrency market, making them high-risk investments. Here are seven high-quality blockchain-related stocks to buy that Wall Street analysts recommend.
DocuSign Inc. (ticker: DOCU)
DocuSign is the market leader in electronic signature technology. The company uses the Ethereum blockchain to record customer agreements and helped create one of the first public prototypes of a blockchain-based smart contract in 2015. Bank of America analyst Brad Sills says the e-signature business has tremendous momentum, the company’s agreement cloud is gaining traction and its margins have expanded in recent quarters. Sills says DocuSign is well positioned to continue increasing its share of a $24 billion total addressable market. Bank of America has a “buy” rating and a $360 price target for DOCU stock, which closed at $267.49 on Nov. 5.
Coinbase Global Inc. (COIN)
Investors and analysts may not agree on which cryptocurrencies will ultimately take over as the world’s preferred digital currencies or which companies will successfully build the metaverse. However, analysts see crypto, blockchain and the metaverse as three of the largest general growth themes in technology, and leading cryptocurrency exchange Coinbase can benefit from all three. CFRA analyst David Holt says Coinbase has the potential to exceed extremely high expectations given the long-term growth potential of the “cryptoeconomy,” which is being built on blockchain technology. CFRA Research has a “buy” rating and a $385 price target for COIN stock, which closed at $337.05 on Nov. 5.
International Business Machines Corp. (IBM)
Enterprise technology leader IBM has struggled to update its legacy business model and generate consistent growth in recent years, but the company has heavily invested in blockchain technology. One application of IBM’s blockchain work is helping companies strengthen supply chain networks, an issue that has significantly disrupted the U.S. economy in recent months. Bank of America analyst Wamsi Mohan says the company’s cloud and artificial intelligence initiatives will also help it gain information technology market share over time. Bank of America has a “buy” rating and a $172 price target for IBM stock, which closed at $123.61 on Nov. 5.
VMware Inc. (VMW)
VMware provides enterprise virtualization software, solutions and services. The company launched its VMware Blockchain in 2020, which it says can help manage highly complex workflows and meet the needs of business-critical, multiparty applications. Morningstar analyst Mark Cash says the recent spin-off by Dell Technologies Inc. (DELL) of its 81% ownership stake in VMware is bullish for investors because it allows VMware to continue to generate growth catalysts without being weighed down by Dell. In the long term, Cash says, VMware will accelerate growth and expand margins. Morningstar has a “buy” rating and a $175 fair value estimate for VMW stock, which closed at $124.55 on Nov. 5.
Nvidia Corp. (NVDA)
Nvidia designs and produces high-end graphics cards and processing chips for personal computers, servers and supercomputers. Bank of America analyst Vivek Arya says Nvidia may be the only company with the scale, hardware, software, developers and ecosystem to participate meaningfully in powering the metaverse, which Arya says will have significant blockchain-based components. Nvidia has been prioritizing the metaverse for years and even launched its own Omniverse beta testing in late 2020. In addition, Nvidia produces specialized chips designed specifically for cryptocurrency mining, providing additional blockchain exposure. Bank of America has a “buy” rating and a $275 price target for NVDA stock, which closed at $297.52 on Nov. 5 after a sharp rally in the past two weeks.
Square Inc. (SQ)
Square investors gain exposure to blockchain technology in two ways. First, Square’s Cash App users can buy and sell Bitcoin directly, and Square even holds more than 8,000 Bitcoins on its balance sheet. Square also has a team of developers known as Square Crypto that is working on building open-source projects with the goal of making Bitcoin the world’s preferred currency. RBC Capital Markets analyst Daniel Perlin says Square’s recent Afterpay buyout will add value for investors and help Square continue to differentiate itself among fintech stocks. RBC has an “outperform” rating and a $312 price target for SQ stock, which closed at $237.38 on Nov. 5.
Overstock.com Inc. (OSTK)
Overstock.com is a leading online retailer and was one of the first to accept Bitcoin as payment. The company spent years investing in blockchain-related projects via its Medici Ventures subsidiary. Earlier this year, Overstock converted Medici into a fund managed by Pelion Venture Partners. Over the next eight years, the fund will develop its blockchain startups and Overstock will share in the profits. Bank of America analyst Curtis Nagle says an upcoming Pelion presentation in early 2022 could be a bullish catalyst for Overstock. Bank of America has a “buy” rating and a $110 price target for OSTK stock, which closed at $104.46 on Nov. 5.
Best blockchain stocks to buy:
— DocuSign Inc. (DOCU)
— Coinbase Global Inc. (COIN)
— International Business Machines Corp. (IBM)
— VMware Inc. (VMW)
— Nvidia Corp. (NVDA)
— Square Inc. (SQ)
— Overstock.com Inc. (OSTK)
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