The declines interrupted an impressive bull run. Indeed, Ethereum seemed on an easy path to clear all-time highs above $1,400 set some three years ago.
That path remains open. What we’re seeing now is a pause in a broader run, rather than a long-term reversal. 2021 is going to be a big year for Ethereum, both in terms of the network and the price.
Ethereum 2.0
One reason for optimism is what is colloquially known as “Ethereum 2.0.”
Ethereum already has real advantages. It’s open-source, meaning essentially anyone can contribute to its development. It’s decentralized: developers can create either “smart contracts” or their own apps to move money, manage agreements or provide myriad other functions.
All of those activities take place on the blockchain. And we know that major companies, in the financial industry and elsewhere, are looking to the blockchain for solutions to vexing problems.
These attributes are why Ethereum, by market capitalization, is the second-most valuable cryptocurrency in the world, behind only bitcoin. But what makes ETH particularly interesting at the moment is that the platform should get even better.
Ethereum 2.0 promises real improvements. The Beacon Chain, launched on Dec. 1, introduces “proof-of-stake” to the network. This is a major step forward in terms of security for an ecosystem that has had a few high-profile hacks. Most infamously, a hacker stole 3.6 million ETH back in 2016, which led to a “hard fork.”
The next step is “shard chains.” Without getting too technical, shard chains should dramatically increase the speed of the Ethereum network.
Gallery: 9 Growth Stocks That Are Priming Their Engines (InvestorPlace)
It’s finally here. What has been a dreadful year in 2020 has finally turned to a fresh set of 365 days on the calendar. Certainly, though, the “double 20s” gave us one final obscene gesture, with the surreal image of an almost empty Times Square in New York City providing us with the twistedly “perfect” send-off. Now, how ’bout them growth stocks to buy for 2021? On the surface, this still seems a remarkable idea to many. Surely, with the horrors of the novel coronavirus and its resultant social and economic calamity, now is not a good time to think about capital investments, let alone growth stocks prone to volatility, right? However, the bulls will argue that sentiment toward equities remain strong — just check out the Robinhood effect where residentially marooned white-collar workers harnessed their inner Gordon Gekko. But is that narrative sustainable? Technically, the answer is it could be. Now, let me give it to you straight — I’m in the camp where investors should only risk money on growth stocks with money they can afford to lose. Currently, the emphasis is on surviving, then thriving as the situation normalizes. However, federal monetary policy has pushed real interest rates — basically, the 10-year Treasury constant maturity rate but with the breakeven inflation rate backed out — into negative territory. Negative, you say? According to Bankrate.com, this is where you pay the bank to hold onto your money, and the bank pays you to take out a loan. It sounds nonsensical and is rife with economic policy debates. However, the bottom line is that there is every incentive to do something with your money ,because staying in cash results in a guaranteed penalty. Frankly, doing something for the regular folks means jumping into growth stocks to buy. Therefore, this talk last year about how the bull market didn’t make sense actually does make sense on a wonky level. Entities took out more commercial and industrial loans when real rates went negative following the 2008 financial crisis. This year, loans also increased. But movement into equities jumped for the “normals.” And if rates continue to be negative or extremely low, these growth stocks to buy could benefit. However, before you go crazy into these potentially viable companies, let me just warn you: We don’t know the long-term efficacy of negative rates. At some point, the penalty of staying in cash is worth the stability relative to a very unknown trajectory of the market. So, approach these growth stocks to buy with a measured approach. Revolve Group (NYSE:RVLV) Akamai Technologies (NASDAQ:AKAM) PayPal (NASDAQ:PYPL) H&R Block (NYSE:HRB) Upland Software (NASDAQ:UPLD) Smith & Wesson Brands (NASDAQ:SWBI) Canopy Growth (NASDAQ:CGC) Ebang International (NASDAQ:EBON) Mind Medicine (OTCMKTS:MMEDF)
Growth Stocks: Revolve Group (RVLV)
My first pick on this list may come as a surprise to some. I’ll be the first to admit that social media influencers are not exactly my cup of tea. But you simply can’t ignore the numbers: According to Statista, the global influencer market size skyrocketed from $800 million in 2017 to $2.3 billion in 2020. And as much as it pains me to say it, this market value will likely rise. Here’s the deal with Revolve Group. You don’t need to know much about it other than its an influencer-driven e-commerce apparel firm. However, RVLV stock is up 93.5% over the past three months, and with the market value set to increase, there’s plenty of room for more growth. Until the day when society (hopefully) moves on from the influencer trend, we can benefit from the rise of social media stars by selfie-sticking Revolve Group into our portfolio of growth stocks to buy. Sure, RVLV stock might make you feel hollowed out. But stay agnostic on this one, and it could pleasantly surprise you.
Akamai Technologies (AKAM)
If I remember correctly, I don’t think I covered Akamai Technologies at all in the past year. Indeed, I don’t remember anybody really mentioning AKAM stock, either from InvestorPlace or from other investment-related resources. However, that could change this year as it’s fundamentally one of the most relevant growth stocks to buy. First, Akamai specializes in global content-delivery-network (CDN) services. When we log onto the internet or stream our favorite shows, we typically don’t think much about where the data centers hosting that data are located. But suddenly, with the worldwide impact of the Covid-19 outbreak, everybody learned a little something about CDNs and their ability to bring “supply” closer to the source of demand. Second, it offers extensive cybersecurity services. Well before the pandemic struck, cybersecurity was a massive industry with a bright future — well, bright in a cynical way. However, the latest cyberespionage event conducted by Russia (or China, according to the warped reality of President Donald Trump) demonstrates that we need stronger online defenses. Naturally, this boosts AKAM stock. Plus, in the new normal, we’re going to rely more on digital solutions as we steadily tackle the coronavirus. That’s beneficial to Akamai, making it a viable play on growth stocks.
PayPal (PYPL)
Before the term “contactless services” was a thing, digital payments were rapidly taking over as the preferred choice for transactional medium, particularly among millennials and Generation Z. As an aside, I question the decision of several small-business owners about sticking with cash only. The more they’re Luddites about payment platforms like PayPal, the more they will find themselves irrelevant. Anyway, the Covid-19 virus has probably taken the decision out of their hands. Nearly 60% of Americans want to put the brakes on using hard cash due to infection fears. That’s understandable during a pandemic, but will they shift their attitudes in the post-pandemic era? My guess is, probably not. This is due in part to the new Covid-19 strain. If this becomes an endemic, we may permanently shift over to cashless, which will cynically boost PYPL stock. But forget all the bad stuff. For starters, PayPal has strong brand recognition. It’s a company that people trust. Furthermore, it’s an incredibly convenient tool for those plying their trade in the gig economy. And that will become more critical as worker bees got their taste of telecommuting — and they like it!
H&R Block (HRB)
If I may be blunt, H&R Block is not one of my favorite ideas for growth stocks to buy. I’ve expressed my bullishness for HRB stock due to the aforementioned transition to the gig economy. As you know, taxes are much more complicated for independent contractors than they are for W2 employees. With the latter, unless you have some complicated transactions, it’s very straightforward. But no, that fundamental narrative hasn’t aligned with the technical performance of HRB stock. Over the trailing 52-week period, H&R Block shares have lost about 32%. Yes, it did pop higher from late September to early December. But it’s given back most of those gains. Why? Unfortunately, I may be a little bit ahead of the narrative in that we’re not seeing a wholesale transition to the gig economy yet. That’s understandable given that most people don’t want to rock the boat during a global crisis. But when they do, HRB could benefit. Also, keep in mind that so many newbies rushed to growth stocks during the onset of Covid-19. Do they all know about the tax implications of short-term trades, especially at frequency? If not, they’re going to get a friendly lesson from the Internal Revenue Service (IRS). And that eventually may translate to higher demand for HRB.
Upland Software (UPLD)
I’m going to be frank with you (as if I wasn’t already). Over the years, we’ve seen a number of enterprise-level management and IT services providers pop up. In my opinion, most of these companies saturate their websites and marketing literature with buzzwords and other business jargon, like KPI and efficiencies. Before you know it, you’re reading its materials and you don’t even know what the company does. To be clear, I probably would have passed up Upland Software under any other circumstance. However, we’re in the new normal, and the old rules simply don’t apply. Indeed, because of the pandemic, UPLD stock is incredibly relevant. Mainly, this is because corporations can no longer take any sales for granted, especially with the personal saving rate at multi-decade highs. This is deflationary, which is not good for any industry. Therefore, I believe that Upland’s customer-experience-management division may help lift UPLD stock higher in 2021. Personally, I’ve had a few bad moments with retailers during the lockdowns. If these businesses would have deployed Upland’s management platform, they probably wouldn’t lose mine.
Smith & Wesson Brands (SWBI)
Due to record-breaking firearm sales during the coronavirus-disrupted year, it was inevitable that gun manufacturers like Smith & Wesson Brands would be one of the top growth stocks to buy. Sure enough, SWBI stock didn’t disappoint. But there’s also an argument to be made that the worst could be behind us. Therefore, Smith & Wesson could take a tumble. Granted, this is one of the more speculative ideas among growth stocks. However, I believe that moving forward, the narrative will be much more conducive to SWBI stock. During the initial phase of the Covid-19 crisis, many people bought guns for fear of scapegoating, an understandable motivation given the vitriolic political environment. Now, I believe this narrative is much more volatile considering that Main Street is on the cusp of an unprecedented implosion. Again, this is where investors need to be a little bit careful about their belief in Uncle Sam. Yes, some monetary policy tools can help the situation. But what happens when investors decide that staying in cash — despite the aforementioned penalty of doing so — is the smarter choice? That could create deflation, which would exacerbate economic and social tensions. Obviously, this is terrible for our country, but it would cynically make SWBI one of the top names to hold.
Canopy Growth (CGC)
When recreational marijuana was first legalized in Canada, many of its green companies saw an initial spike in sentiment. However, as is often the case, government bureaucracies combined with overspeculation put promising firms like Canopy Growth against the wall. Sadly, that meant CGC stock was a frequent contributor of red ink. However, the narrative changed in 2020, particularly in the final quarter. Does this mean that cannabis firms represent the top growth stocks to buy in the new year? Well, I don’t want to say this time, it could be different. Nevertheless, there are encouraging developments that speculators should acknowledge. First, the Covid-19 crisis has been a stressful one for all of us. While statistically, the vast majority of us have thankfully avoided contracting the disease, we’ve been unable to avoid the pandemic’s disruption. As the Washington Post noted, this intrusion has negatively affected our health. Though I’m not suggesting that cannabis is the answer for everyone, I’m sure more people will be willing to experiment. Further, several states have moved to legalize cannabis to various degrees in the last election, and positive momentum continues unabated. Potentially, this could dramatically increase Canopy’s consumer base, which of course would be positive for CGC stock.
Ebang International (EBON)
There’s no way around it: Ebang International is one of the riskiest growth stocks to buy, because it’s largely a play on cryptocurrencies. Even a cursory look at its financials, whether it’s the less-than-desirable balance sheet (which is laden with debt) or its inability to generate a profit, EBON stock spells trouble. Then again, the appeal for shares is the underlying rise in virtual currencies. Just as 2020 was drawing to a close, cryptos became a hot topic, with strong sentiment shifting over to these digital assets. In many ways, the Robinhood effect was at play here, this time with a different platform focus. And it could continue like this well into 2021. Given how easy — and contactless — it is to park your money into cryptos, they appeal to contrarian investors. Still, one of the drawbacks of crypto-related investments is that they don’t follow traditional norms. For instance, a cyberattack at a major crypto exchange — something that is completely outside of your control — can instantly damage your portfolio. However, a crypto-mining equipment provider like Ebang can provide indirect exposure to virtual currencies while limiting some of the unique negative catalyst. This doesn’t make EBON stock any less speculative. However, if you want maximum growth potential, this could be it.
Mind Medicine (MMEDF)
I’m putting Mind Medicine dead last on this list of growth stocks because frankly, I’m not sure where this is going to end up. Fundamentally, I’m a strong believer in the underlying psychedelic medicine industry. However, belief alone won’t make MMEDF stock swing higher, especially since shares have already jumped so much. One of the factors that makes Mind Medicine appealing is the high barrier to entry. Unlike the cannabis market, there’s probably zero chance that psychedelics will ever be approved for recreational use. You might think that’s a bridge too far, and you’re probably right. But that means anyone who wants to participate in this sector must be serious about it. Thus, I don’t think we’re going to see the unsustainable surge that we saw in legal weed earlier. However, you want to approach MMEDF stock with a clear mind. When I first started talking about the underlying company in late April of last year, shares were trading hands at 44 cents. It’s not that price right now, not by a long shot. On the date of publication, Josh Enomoto had a long position in MMEDF stock.A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
More From InvestorPlace
10/10 SLIDES
All told, what we have is a platform that already has real value — and is going to get even better.
Load Error
Smart Contracts
What Ethereum 2.0 can do is make the blockchain part of the everyday economy. And that would be a huge plus for ETH.
Essentially, Ethereum can become the backbone of “decentralized finance.” It can digitize almost everything. As one bull pointed out, “[t]he digitization of the contract is the digitization of the global economy.”
That global economy has a total gross domestic product of roughly $142 trillion. At $1,219, Ethereum has a market capitalization of $139 billion.
To be sure, those numbers aren’t necessarily apples-to-apples. And it will be a long time before Ethereum digitizes even a small portion of the global economy.
But those figures show the potential here. Ethereum has applications in so many industries. Banks obviously are interested. So are law firms, given the potential for “smart contracts.”
The applications go far beyond that, however. Maritime shipping companies, for instance, are working toward blockchain-based solutions. Indeed, given the potential of decentralized finance, basically every company in every industry in the world could one day look toward Ethereum as an opportunity — if they haven’t done so already.
The Pullback
Now, just because the platform has potential doesn’t mean Ethereum is going to climb straight up. As we’re seeing at the moment, cryptocurrencies are not immune to volatility. Bitcoin provides another example: just in the first two weeks of 2021 it has moved from $29,000 to above $40,000 and now back below $40,000.
For ETH, we’ve been here before. Again, the cryptocurrency reached all-time highs back in 2018. That followed an absolutely staggering run from $8 at the end of 2016 to over $1,400. Within less than a year, those highs had turned into lows below $100.
Investors who believe in the long-term potential of Ethereum have good reason to do so. But they need to prepare for some short-term volatility along the way, as we’re seeing right now.
And there are risks. Other “altcoins” are trying to compete in the blockchain space. There’s no shortage of efforts from tech companies, large and small. Those companies may push for blockchain solutions that are more centrally managed.
After all, Ethereum is trying to revolutionize finance. It’s a noble effort, and one with a real chance of working. But revolutionary processes are slow, uncertain and often messy.
Still, I always counsel investors to take the long view. That applies to ETH as well. This is one of the most exciting cryptos out there. It might be the most exciting. That’s more than enough for a long-term case, and more than enough to see this short-term pullback as a buying opportunity.
On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in the article.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.
The MarketWatch News Department was not involved in the creation of this content. Feb 07, 2021 (WiredRelease via Comtex) — A consciously conceived and designed business intelligence report titled Global Anti-Wrinkle Products market 2021 by Manufacturers, Type, and Application, Forecast to 2030 by MarketResearch.biz discloses a succinct analysis of the regional spectrum, […]
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