For more than a century, the stock exchange has been one of the greatest wealth creators. The broad one S&P 500 may not be the top performing investment vehicle every year, but when compared to bonds, homes, and commodities, it delivers superior average annual returns over the long term.
However, in recent years, the market’s return superiority is due to the rise of cryptocurrencies such as. came under fire Dogecoin (CRYPTO: DOGE).
The Dogecoin Pump-and-Dump is in the final phase
To pick the dates a bit, Dogecoin achieved more than 27,000% between early November and early May Tesla CEO Elon Musk (aka “Dogefather”) moderated Saturday Night Live and mentioned the “people’s currency” Dogecoin.
But since the high of $ 0.7375 per token, the national currency has imploded. On July 20, you could snag a single Dogecoin for just over $ 0.16, down about 78% in just over 10 weeks. While you won’t find a shortage of people who believe this withdrawal is a buying opportunity, the more likely scenario is that the Dogecoin pump-and-dump has reached its final stage. In other words, it’s game over for Dogecoin.
Although momentum has played a huge role in increasing cryptocurrency prices, the fact remains that Dogecoin never had a competitive advantage.
- It has never been particularly cheap to complete transactions on Dogecoin’s blockchain. There are well over a dozen popular cryptocurrencies that can complete transactions at a fraction of the total cost of a Dogecoin payment.
- Dogecoin validation and settlement times have never been so impressive. Quite a few of the digital currencies that offer significantly lower transaction fees than Dogecoin also validate and settle payments faster.
- At its peak, Dogecoin can reportedly process 40 transactions per second. Meanwhile, payment processor Visa can process 24,000 transactions per second. Based on the typical number of transactions validated per day on Dogecoin blockchain, it would take nearly four decades for Dogecoin to do what Visa and MasterCard combine to do daily (about 700 million transactions).
- Dogecoin has never been accepted far beyond the exchange of cryptocurrencies. It took eight years for 1,400 mostly obscure companies around the world to accept Dogecoin as a means of payment.
Long story short, Dogecoin doesn’t fly to the moon. We are sorry to disappoint the many “hodlers” and speculators.
Forget Dogecoin: these stocks can go to the moon
But just because Dogecoin isn’t tied to the moon doesn’t mean there aren’t any stocks to withdraw. Opportunistic investors looking for stocks that could go to the moon, so to speak, should consider buying the following trio of high-growth companies.
One of the safest investments in this decade is in U.S. marijuana stocks. Even if the federal government doesn’t pass meaningful cannabis reform measures, the 36 states that have legalized cannabis in some ways offer more than enough opportunity for the industry to generate tens of billions in annual sales. Reason enough to believe Cresco Labs (OTC: CRLBF) is ready to take off skyward.
Taking organic and inorganic growth into account, Cresco Labs has opened 33 pharmacies in legalized states and will have a total of four dozen pharmacies once the pending acquisitions are complete and all retail licenses are in use. What is notable about Cresco’s expansion strategy is that it targets a number of high dollar markets (Florida) or limited licensing markets (Illinois and Ohio). Entering markets where the number of retail licenses is limited overall and by business area will ensure that Cresco has every opportunity to build its brand and gain market share.
But let’s face it, investors will be far more excited about Cresco’s industry leading wholesale business. Although cannabis wholesale has lower margins than retail, Cresco has more than enough volume to make that margin gap irrelevant. This is because the company holds a cannabis distribution license in California, which it received in January 2020 through its acquisition of Origin House. This license enables Cresco to sell proprietary and third-party cannabis products in more than 575 pharmacies across the Golden State (i.e. the world’s best-selling weed market).
Between retail and wholesale, Cresco should be one of the fastest growing pot stocks of the decade.
Another stock that has the potential to take a moonshot as Dogecoin continues to decline is the ad tech company PubMatic (NASDAQ: PUBM).
Since the Internet became mainstream over a quarter of a century ago, we have seen the highly inefficient human element of ad pricing be undermined in favor of programmatic advertising. Programmatic advertising describes buying, selling and optimizing ads in real time using machine learning algorithms.
PubMatic is a so-called sell-side platform. This means that it helps publishers sell their ad space to advertisers. PubMatic’s cloud-based ad tech infrastructure allows publishers to remain in complete control while maximizing the user experience. For example, publishers can set minimum price floors for the price for which they sell their advertising space. In addition, PubMatic’s platform relies on machine learning to choose the best ad to see a user, rather than the most expensive ad. This approach clearly works, as evidenced by the 30% increase in spending by existing publishers in the first quarter compared to the same quarter last year.
Particularly exciting for PubMatic is its long-lasting double-digit growth potential in the areas of mobile, digital video and connected TV / over-the-top programmatic ads. As the cable teardown progresses, PubMatic will be in a unique position to benefit from changing advertising dollars. In short, this little fish could soon become a big fish in the ad tech pond.
One last company that can fly to the moon over time is clinical-stage biotech stocks Novavax (NASDAQ: NVAX). Usually there is a lot of uncertainty in clinical stage companies, but that’s not exactly the case here.
As you may have guessed, Novavax’s fame has to do with its links to 2019 coronavirus disease (COVID-19) research. Two remarkably successful large-scale studies have been conducted for the company’s experimental COVID-19 vaccine, NVX-CoV2373. In March, the company reported vaccine efficacy (VE) of 89.7% from a large-scale study in the UK. Recently, in June, a phase 3 study in the US and Mexico found a very similar VE of 90.4%. In other words, it only seems like a matter of time before Novavax receives Emergency Authorization (EUA) for its COVID-19 vaccine in the US, UK and Europe.
The only thing that really held Novavax back is delays. The company has postponed its EUA filing in major developed markets from the second quarter to the third quarter, and the company does not expect to ramp up to full production capacity until the fourth quarter. This has led some people to believe that Novavax may be missing out on some easy market opportunities in developed markets. However, given the sheer number of unvaccinated people around the world, there is more than ample demand for another highly effective vaccine.
What might really separate Novavax is the company’s early work on a combination vaccine for COVID-19 and influenza. If Novavax can successfully bring a vaccine to market that combines two contagious and fatal diseases in one treatment, there are no limits.
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.