Are Crypto Miners the New Value Stocks?

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Are Crypto Miners the New Value Stocks?


Let's put Barron's and CNBC claims to the test


For the better part of a year, cryptocurrency mining stocks have struggled. This week, analyst Christopher Brendler stated in Barron's that "miners offer a greater risk/reward to the underlying Bitcoin ."


It's a bold remark, but there's some logic to it. While Bitcoin (and other cryptocurrencies) can be volatile, "we see minimal downside from here" for miners because their operations are lucrative somewhere above BTC $10,000, according to Brendler. So, despite the fact that BTC fell sharply before stabilizing around $44,000 this week, we're still well within the acceptable range for crypto miners.


Bill Miller, an outspoken value investor, acknowledged on CNBC Wednesday that Crypto miner are reasonably priced. While Miller was more interested in Silvergate Capital (NYSE:SI), Barron's featured Marathon Digital (NASDAQ:MARA).


Today, we'll put this to the test - and determine which crypto miners are currently the best value bets.


Value investing vs growth investing


First, let's get one thing straight: Why is value investing important? Because it keeps your portfolio growing even when growth stocks are underperforming. If you think they're out of style now, consider the 2000s. Following the failure of so many dot-com enterprises, the market wrote off growth stocks for a good ten years – and shifted into value stocks.


The chart below compares the total returns of the Russell 3000 Value Index and the Russell 3000 Growth Index over a 20-year period. The value index surged ahead so dramatically in the 2000s that it outperformed the growth index by +302 percent to +176 percent!


Let's put Barron's and CNBC claims to the test
Source: YCharts


Value investing Warren Buffett


Growth returns sooner or later – but that's a vital lesson to remember if you're in it for the long haul.


And I'm saying it now: the winners in The New Digital World will be those that invest for the next five to ten years. Jumping in and out of meme currency can be exciting... But it's difficult to claim that Dogelon Mars will be "a thing" a year from now, and it comes with a LOT of risk.


So, if you're looking for this type of investment, which value plays offer the best possibility right now?


If we're talking about cryptocurrency, you should check out what our Multifactor Altcoin Grading (MAG) System has discovered for Luke Lango and Charlie Shrem's Ultimate Crypto Portfolio.


Crypto miners are frequently traded on the stock exchange. As a result, I ran them through Portfolio Grader, our stock rating system created by investing expert Louis Navellier. It's completely free and simple to use, and it's responsible for some absolutely stunning results.


When you look up stocks in the Portfolio Grader, it assigns nine marks (from A to F, just like in school) to the top predictors of stock success.


Eight of the grades are combined to form an overall Fundamental Grade. The Quantitative Grade then assesses money flows from large institutions, which drive so much market activity. As a result, a high Quant Grade suggests that your stock is gaining traction.


I've entered the largest and most well-known crypto miners into Louie's Portfolio Grader below. The majority of them have a high Quantitative Grade... However, the fundamentals are frequently mediocre:


Are Crypto Miners the New Value Stocks?
Source: PortfolioGrader.com


Here is our Report Card for Silvergate Capital, which was discussed earlier. SI has a strong growth score, but its Cash Flow leaves more to be desired... and downward Earnings Revisions, along with a history of poor Earnings Surprises, results in a worse grade:


Are Crypto Miners the New Value Stocks?
Source: PortfolioGrader.com

Marathon Digital also problems with Cash Flow, Earnings Surprises, and Earnings Revisions:


Are Crypto Miners the New Value Stocks?
Source: PortfolioGrader.com


On the plus side, HIVE Blockchain Technologies (NASDAQ:HIVE) and Hut 8 Mining Corp. (NASDAQ:HUT) both receive high Fundamental Grades as part of their overall "Buy" rating.


HUT and HIVE are recent cryptocurrency equities that went public in June and September of 2021, respectively. This week, both companies received great notice for their output totals.


Bitcoin and Ethereum hashrates have both increased dramatically . This increases network security while also making mining more difficult. Despite this, HUT mined 308 BTC in January (worth $1.3 million today), an 11.6 percent increase over December. Meanwhile, HIVE mined 264 BTC (equivalent to $1.2 million today), a 7.7 percent increase over December.


Overall, HUT has a nice Report Card across fundamentals and momentum:


Are Crypto Miners the New Value Stocks?
Source: PortfolioGrader.com


HIVE's Report Card is even more impressive:


Are Crypto Miners the New Value Stocks?
Source: PortfolioGrader.com


When you observe good Cash Flow as well as growth, you know you've got a fantastic bargain play!


After crunching the figures, the Barron's and CNBC angle appears to be absolutely correct — select crypto miners may suddenly represent a wonderful deal.

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