Dogecoin is a dud: purchase these surefire shares as a substitute – Motley Idiot

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In the long term, the stock market is a proven money machine. The benchmark has been since 1980 S&P 500 has posted an average total annual return, including dividends, of just over 11%. That said, people who reinvest their dividends have doubled their money on average every 6.5 years since 1980. That is impressive given the many obstacles the stock market has gone through (the dot-com bubble, the Great Recession.). , and the coronavirus crash).

But in recent years the broader market has receded behind the mother of all momentum trades: cryptocurrencies. For example, Bitcoin, the world’s largest digital currency by market capitalization, averaged a three-digit annual return, which absolutely outperforms the S&P 500.

However, it is not Bitcoin that fascinates retail investors. The real crypto charm is the “people’s currency”. Dogecoin (CRYPTO: DOGE).

A pedigree Shiba Inu dog sitting on grass and looking up.

The dog breed Shiba Inu served as inspiration for the developers of Dogecoin. Image source: Getty Images.

The Dogecoin cops don’t see the whole picture

Why Dogecoin? Some investors love it because of its perceived “affordable” price of less than $ 0.40 per coin. Others point to the lower transaction fees compared to the Big Two (Bitcoin and ether). And yet other investors believe in the growing utility of Dogecoin. Unfortunately, all of these would-be catalysts are wrong or overlook the bigger picture.

For example, Dogecoin could be nominally cheap at $ 0.38 per coin (as of late afternoon on June 4th), but this completely ignores the fact that there are already nearly 129.9 billion Dogecoin in circulation, with around 5, Mining activities add 2 billion new Dogecoin. Supply inflation of around 4% in 2021 might not sound like much, but it has been well over a decade since actual price inflation in the US was 4%. In short, Dogecoin is neither cheap nor a very good inflation protection.

If you take a closer look at Dogecoin transaction fees, you will find that they are lower than Bitcoin and Ethereum. What enthusiasts often sweep under the rug, however, is that they are noticeably higher than a number of other popular cryptos. Stellar, Ripple, Bitcoin cash, Bitcoin SV, Ethereum classic, Nano, and Line are just a few that have significantly lower transaction fees than Dogecoin. Additionally, the roughly 20 minutes it takes Dogecoin to validate and process payments is longer than many of its competitors. It is not the efficient network that its fans believe it is.

After all, its usefulness is questionable. That’s because exchanging cryptocurrencies doesn’t bring much benefit at all. Only about 1,300 companies worldwide have given the green light to accept Dogecoin as a form of payment, and it has taken eight years to reach this pathetic level.

In summary, Dogecoin is a dud and not worth your hard earned money.

Dump Dogecoin for these top tier stocks

Instead of buying what looks like a hype-driven pump-and-dump asset, I’d suggest investing your money in the following trio of surefire stocks. These are companies with real growth prospects and fundamentals to get your hands on.

A person inserting a credit card into a square point of sale card reader at the checkout.

Image source: square.

square

If you’ve got a cryptocurrency itch that just needs to be scratched, consider buying fintech stocks square (NYSE: SQ)which provides exposure on bitcoin trading (I’ll get into that in a moment).

Most people probably know Square for its salesperson ecosystem. This is the segment that offers point of sale equipment, analytics, loans, and other tools to help merchants grow their business. In the seven years leading up to the pandemic, the Gross Payment Volume (GPV) processed on the Square network grew from around $ 6 billion to approximately $ 106 billion (averaging about 49% annually).

What is particularly encouraging about the seller ecosystem is that it generates a larger percentage of the sales from larger dealerships. In the quarter that ended March, 61% of GPV came from companies with annualized GPV of $ 125,000 or more, up from 52% in the same quarter of 2019. Since the seller ecosystem is a mostly fee-based segment, larger businesses should help businesses keep it a solid double-digit annual growth rate.

Square’s even livelier growth segment is its peer-to-peer digital payment platform Cash App. Between the end of 2017 and the end of 2020, the number of monthly active users (MAU) of Cash App more than quintupled to 36 million. Additionally, Square generates $ 41 gross profit per MAU and spends less than $ 5 to attract each new user. It should come as no surprise that Cash App outperforms the seller ecosystem as the main driver of the company’s gross profit.

While Cash App can generate income through merchant fees and bank transfer fees, investments and the Bitcoin exchange are the main drivers of sales and interest rates. If crypto trading remains popular, Square will benefit.

A veterinarian who keeps a small dog.

Image source: Getty Images.

Elanco animal health

Another surefire way to make money in the stock market is to use it in companies that focus on pets. Therefore suppliers of veterinary drugs Elanco animal health (NYSE: ELAN) is such a smart buy.

The pet industry may not be growing at the breathtaking pace of cybersecurity or cloud computing, but it could be the safest growth trend of any industry worldwide. According to data from the American Pet Products Association, it has been at least a quarter of a century since spending on pet supplies declined year over year. This year, nearly $ 110 billion is expected to be spent on pets, including $ 32.3 billion on veterinary and other medical products.

Elanco has its paws in both domestic and commercial animal sales channels. Before last year, the company generated most of its sales from disease-free animal husbandry. But acquiring a $ 7.6 billion deal BayerThe Animal Health segment increased its involvement in the much faster growing pet segment. This deal should increase the company’s organic growth potential and result in annual cost synergies of up to $ 300 million.

The current plan calls for Elanco to launch eight new products this year, which can initially generate sales of $ 100 million in 2021. This should help Elanco meet Wall Street’s aggressive growth target of nearly doubling earnings per share between 2021 and 2024.

A large cannabis pharmacy sign outside a retail store.

Image source: Getty Images.

Green thumb industries

Certain U.S. marijuana stocks can also be much smarter investment decisions than the hype-fueled Dogecoin. Especially multistate operator (MSO) Green thumb industries (OTC: GTBIF) should have no problem making his long-term investors richer.

Despite a wave of consolidation in the US MSO sector in recent months, Green Thumb stands out as one of the largest players in the industry. With the completion of the Liberty Compassion acquisition, Green Thumb has 58 operational pharmacies and enough retail licenses to open 45 additional locations. In total, it has access to a dozen legalized markets.

In general, Green Thumb was picky about its expansion. They are select markets that have billions of dollars in annual sales potential like New Jersey, high potential per capita spending like tourist-dependent Nevada, and licensed states like Illinois. Choosing to operate in limited license states is a smart move in that it reduces competition that Green Thumb is struggling with. This means a better chance of building your brand and creating a loyal following.

Arguably the best thing about Green Thumb is that almost two-thirds of its sales are derived from cannabis products. Derivatives such as vapes, edibles, oils and infused beverages have higher prices than dried cannabis flowers and are less prone to oversupply. In other words, they are Green Thumb’s ticket to recurring profitability.

Unlike Dogecoin, Green Thumb will make investors see green.

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.

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