The selloff of the past five weeks has taken no prisoners. It executed members of the “industry” group without discrimination.
That is good news. The “companies” are not experiencing individual problems.
This industry has been punished however the reason sets up a nice recover once the current emotion has run its course. Goldman Sachs has a number blockchain/crypto on its list of best picks for 2022. The reason is inflation that the ability of this sector to outgrow inflation in both revenue growth and profit growth.
Seeking Alpha, Nov 20, 2021
Goldman Sachs High margin stock Picks for 2022: Russell 3000 (NYSEARCA: IWV) companies with market cap over $2B, consensus 2023 revenue growth over 15% and 2023 margins over 20%:
- Halozyme Therapeutics (NASDAQ:HALO), consensus sales CAGR 2021-23 is 30%, consensus 2023 profit margin is 63%
- Marathon Digital (NASDAQ:MARA), sales 105%, margin 51%
- Mastercard (NYSE:MA), sales 18%, margin 47%
- Riot Blockchain (NASDAQ:RIOT), sales 69%, margin 46%
- MP Materials (NYSE:MP), sales 50%, margin 45%
- United Therapeutics (NASDAQ:UTHR), sales 13%, margin 42%
- Aspen Technology (NASDAQ:AZPN), sales 13%, margin 41%
- Universal Display (NASDAQ:OLED), sales 20%, margin 38%
- Harmony Biosciences (NASDAQ:HRMY), sales 52%, margin 37%
- Marvell Technology (NASDAQ:MRVL), sales 20%, margin 35%
LOTM Note: SLNH, in the same group as MARA and RIOT, will see revenue grow apx 100% from today to the end first quarter 2022 with 80% gross margin. Link to SLNH Dec 13 monthly update.
MARA is trading at 8 times forward earnings.
COIN is trading at 18 time forward earnings
SLNH* is not on the map yet for analysts, but they will be within five months. Revenue and gross margins will come close to doubling from Dec 13, 2021, to March 30 2022.
Galaxy Digital (BRPHF)* has two major events (positive) happening in the next 90 days. Listing in the USA and closure of BitGo acquisition.
Each of these are attractive to LOTM at this time – available funds and a goal of a tight focus, limits us to only owning two of the above at this time. The two we own are SLNH and Galaxy Digital. If we chose to be more diversified and had more funds, we’d be owning MARA and COIN as well.
The chart pattern below for each company is a giant cup and handle. A cup and handle is considered a very positive chart pattern. This is the time to do dollar cost averaging. I have no qualms in admitting, I did not see this sell November/December sell off coming. However now that we are here, let’s make the most of the pull back.
Buying healthy companies in times of FUD (fear, uncertainty and doubt) and given some time, is the best way to build wealth!
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* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
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