Ditch Dogecoin: These shares are crying out for June purchase – Motley Idiot
Stocks have been a wealth creation machine for more than a century. For the very long run, the stock market has had an average annual return of around 7% with dividends reinvested. That might not sound like a lot, but that return will double your money once a decade. In other words, you would increase your initial investment by 15 times in 40 years.
But for many young investors, stocks have been a minor issue, thanks in part to the rise of cryptocurrencies. In particular, they cannot stop chirping about the so-called “people’s currency”, Dogecoin (CRYPTO: DOGE).
Uncover the Truth About Dogecoin
Dogecoin is popular with retail investors for a variety of reasons. It’s nominally cheap to buy, has lots of love and meme action from Tesla CEO Elon Musk and more companies than ever are accepting it as a form of payment. Dogecoin investors believe they are getting in near the ground floor of a future global currency. However, none of these statements are entirely correct or tell the full story.
Sure, Dogecoin is at $ 0.38 per token compared to. nominally cheap Bitcoin at nearly $ 38,000 per coin. But that comparison doesn’t take into account the 130 billion Dogecoin that will be in circulation within a few weeks. Every year the mining activity brings about 5.2 billion new Dogecoin into circulating supply. That 4% inflation in 2021 may not sound like much of a concern, but it has been a long time since actual inflation levels in the US hit 4%. Dogecoin is a pretty bad inflation hedge.
The enthusiasts also make exaggerated statements about the introduction of the national currency. First of all, the Dogecoin blockchain processes only 50,000 transactions per day per BitInfoCharts.com. To put this in context, with 50,000 transactions per day, it would take Dogecoin more than 38 years to process the same number of transactions from payment processors Visa and MasterCard process combined in one day. It’s also only accepted by around 1,300 companies, which shows what little use it has beyond crypto exchanges.
Even Musk is a liability for Dogecoin. Let’s not forget that just a few months ago, Musk was all-in on Bitcoin and even allowed consumers to buy Tesla electric vehicles with Bitcoin. Less than 50 days after this policy was passed, he changed his mind as concerns about the negative environmental impact of Bitcoin mining influenced his decision.
The whole story is that Dogecoin is a terrible investment.
Dump Dogecoin for greener pastures
Rather than investing in something that has clearly become a hype-fueled asset that has virtually no fundamental catalysts, you’d better ditch Dogecoin for stocks with tangible growth prospects. The following trio of stocks are all screaming to buy in June, and they would fit the bill perfectly.
Most people think that growth stocks and value stocks are separate from each other. In reality, some companies can offer both high growth and low discount value. That is the case with clinical-stage biotech stocks Novavax (NASDAQ: NVAX).
The biggest catalyst currently in Novavax’s sails is the experimental Coronavirus Disease 2019 (COVID-19) NVX-CoV2373 vaccine treatment. This vaccine, the scientific name of which is rolling on the tongue, showed impressive efficacy in a large-scale Phase 3 study in the UK. Overall, NVX-CoV2373 showed 96.4% effectiveness against the original strain of the virus and 86.3% effectiveness against the prominent British variant.
The only reason Novavax did not fly to the moon with such exceptional results is because of the numerous delays. The company had forecast an emergency permit application in the US, UK and Europe in the second quarter, but has been postponed to the third quarter. There are also concerns about Novavax’s ability to manufacture a significant amount of vaccines before the fourth quarter.
There is obviously concern that Novavax may miss out on the high-margin, low-hanging fruit in major developed countries. But this thesis misses an essential point: There are around 7.9 billion people in the world, and only a small proportion of them are vaccinated against COVID-19. Even if Novavax is initially a small player in developed countries, its potential in emerging markets and as a booster vaccine supplier in developed countries could enable it to raise billions annually.
Novavax has $ 2 billion in cash and has a price / earnings ratio of just six by the Wall Street consensus. It’s a dirt cheap growth stock that is crying out to be bought.
First Majestic Silver
Another screaming buy that could orbit Dogecoin is gold and silver mining stocks First Majestic Silver (NYSE: AG). Although precious metal mines have lagged the broader market in recent years, mining stocks appear to be reaching the sweet spot in their growth cycle.
From a precious metals perspective, it couldn’t be better. The global economy recovering from a pandemic-induced recession should greatly boost demand for silver, where First Majestic is expected to generate around 57% of its sales this year. Meanwhile, gold continues to face favorable headwinds from historically low lending rates and the prospect of higher inflation at some point in the future. In short, First Majestic should benefit from higher average realized sales prices.
But there’s more to like here than just higher gold and silver prices. First Majestic Silver has four operational mines and four projects in the pipeline, all of which will increase their silver equivalent ounce (SEO) production over time and potentially reduce the company’s overall costs.
The San Dimas mine continues to be the superstar, with the installation of a new high-performance grinder mill expected to further increase production. But don’t overlook the La Encantada silver mine, which will see a significant increase in production once the Ermitano project delivers initial results in 2022.
In short, First Majestic Silver’s operating cash flow will skyrocket.
The biotech industry is also home to a third screaming purchase in June: Vertex Pharmaceuticals (NASDAQ: VRTX).
What makes Vertex special is the company’s focus and success in treating patients with cystic fibrosis (CF). CF is a genetic condition characterized by a thick production of mucus that blocks the lungs and pancreas. There is currently no cure, but Vertex has developed several generations of treatments to improve lung function and has them approved by the Food and Drug Administration (FDA).
The latest treatment for Vertex is Trikafta combination therapy. Following a Phase 3 study in which Trikafta improved forced expiratory volume by 3.7 percentage points in one second, the FDA gave Vertex’s lead drug the green light five months ahead of its scheduled review date. Because it targets the most common CF mutation (which 90% of CF patients have), it is expected to have annual sales of $ 6 billion.
Because Vertex was so successful in developing treatments for CF it was able to build a mammoth war chest. The company ended March with $ 6.9 billion in cash. That’s capital she’ll use to fund the internal development of a dozen connections and make acquisitions.
Rather than gamble on a sub-par digital currency, you should definitely consider giving up Dogecoin for the highly profitable Vertex.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.