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Bitcoin grew in 2020, with its price climbing around 150% year to date. After many months of volatile trading, the cryptocurrency has climbed back to the $ 18,000 per coin range – not far from the high of $ 19,738 per coin reached in late 2017. With its price soaring, bitcoin is generating tons of excitement again. but there may be even better investment opportunities in the tech sector.
We asked three Motley Fool contributors to profile a tech stock they think will overtake bitcoin. Read on to see why they identified themselves Impinj (NASDAQ: PI), Square (NYSE: SQ), Advanced micro devices (NASDAQ: AMD) as investments that could offer large returns.
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Are you looking for huge returns? Trends are your friends
Keith Noonan (Impinj): I haven’t invested in bitcoin because I don’t understand it. I have studied it alongside other cryptocurrencies, but I still don’t have a solid understanding of why prices should go up or down. I also have a hard time formulating why an open source coin built on blockchain technology has a much better outlook than other coins, which seem to grow in number with each passing day.
However, I understand that bitcoin has garnered support because bulls see it tap into a variety of powerful trends and serve potentially valuable functions. Even if I don’t understand bitcoin, I know that finding technologies that can tap into and help shape influential trends can be a very rewarding approach to investing. Impinj stands out as one of my favorite growth bets in that mold.
Impinj manufactures radio frequency identification (RFID) tags, readers and software. The company’s RFID tags can function as more advanced versions of the barcode system and can be used to allow non-electronic items to store and transmit data. Collecting and analyzing valuable information will be at the heart of business success in the 21st century, and Impinj provides solutions that make it possible to monitor more elements and processes.
The company has the potential to experience dramatic growth with the emergence of new use cases for RFID technologies and the adoption of hardware, software, and support services. There is speculation involved in charting Impinj’s trajectory, but the stock has the potential to be a huge winner for risk-tolerant investors.
The bitcoin facilitator
Joe Tenebruso (Square): First, let me tell you that I would not recommend selling bitcoins now. As a contributor to The Motley Fool’s Crypto Society service, I’ve been optimistic about bitcoin for quite a while and believe it could easily reach new all-time highs. But rather than being poetic about the venerable cryptocurrency itself, I would like to focus investors’ attention on another way to profit from bitcoin’s growing popularity.
Square CEO Jack Dorsey is a fiery bitcoin bull. He sees a future where it will eventually become the Internet’s “native currency” – and he intends to help bring that vision to fruition. Under his leadership, Square began offering its users the ability to buy and sell bitcoins on its hugely popular Cash App in 2017. Since then, the digital payment company’s bitcoin business has enjoyed torrid growth – by an amount. of $ 1.63 billion in revenue in the third quarter alone, an 11-fold increase year-on-year.
Square has also invested directly in bitcoin. It bought more than 4,700 bitcoins for an average price of around $ 10,600 in early October. With bitcoin trading close to $ 18,000 today, that $ 50 million investment is now worth around $ 85 million. That’s a 70% gain in just over a month.
Yet, importantly, Square sees bitcoin as much more than just a get-rich-quick scheme. “Square believes cryptocurrency is an economic empowerment tool and offers the world a way to participate in a global monetary system,” the company said in its bitcoin purchase announcement. Square believes bitcoin aligns well with its goals and values, and Dorsey is positioning the fintech star – and his shareholders – to profit from the crypto revolution.
Put your chips on this semiconductor stock
Will Healy (Advanced Micro Devices): In 2017, during the height of the latest bitcoin bull market, AMD produced the chips of choice for cryptocurrency miners. However, investors today may want to look into the mining profits in the AMD shares themselves.
Since Lisa Su took over as CEO in 2014, she has led the fledgling chip maker from near bankruptcy to an industry leader. He challenged NVIDIA in the GPU market. Due to its success, some even call AMD the new “king of gaming CPUs”. AMD now powers the latest generation of Sonyis PlayStation and MicrosoftXbox game console, among other hits.
However, his most impressive feat is undoubtedly turning the tables on his longtime rival Intel. After decades of Intel’s lag, AMD now sells a 7nm chip while Intel has found itself unable to progress beyond 10nm processors.
For now, Intel remains the much larger manufacturer. However, AMD has gained significant ground.
In the last quarter, Intel produced about 6.5 times more revenue than AMD. In the quarter of a year ago, Intel’s revenue was nearly 11 times higher. The fact that AMD’s revenues grew 56% was a significant help, as was the 128% increase in adjusted earnings per share.
Also, even though analysts expect growth to slow next year, they still expect net profit to rise by 50%. With a forward P / E ratio of 48, this makes AMD shares look like a bargain despite the 70% share price growth during 2020.
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