Bitcoin (BTC) soared to a new all-time high of $48,003 this morning as electric vehicle maker Tesla (TSLA) told regulators it bought $1.5 billion worth of the world’s largest cryptocurrency by market cap.
On Monday — when bitcoin hit its previous all-time high — Tesla said it did so to provide “…more flexibility to further diversify and maximize on our cash.”
Tesla also noted it would use some of its bitcoin stash to help it begin accepting payments (where legal) for its products in bitcoin, making it the first among large-scale automakers to do so.
Interestingly, CEO Elon Musk is a public bitcoin supporter — he put #bitcoin on his Twitter bio a couple of weeks ago, which sent the price briefly soaring 20% — and helped boost online memes surrounding other cryptocurrencies as well.
For example, Musk is widely considered to be the driving force behind Dogecoin’s near 40% increase from Sunday through Monday after he posted a Dogecoin meme on Twitter. It wasn’t the first time Musk Tweeted about Dogecoin either, though he’s admitted he sees it more as a joke.
But his support for bitcoin appears genuine. And he’s far from the only major business figure to act on his desire to keep a part of his corporate treasury in bitcoin.
In fact, corporations looking to bolster their treasuries and hedge against currency devaluation — including online payments leader Square (SQ) and the financial technology firm MicroStrategy Inc. (MSTR) — have accumulated more than $57 billion in bitcoin, or just over 6% of the total bitcoin supply.
Companies like Square and PayPal Holdings (PYPL) have also opened up new revenue streams by catering to bitcoin investors, allowing them to buy and sell it and other cryptocurrencies on their platforms.
In Square’s third-quarter earnings announcements, the company saw $1.63 billion in bitcoin revenue, up 11X from a year prior. Square’s Cash App allows users to buy and sell bitcoin, and the payments company recently said it will allow customers to get bitcoin back on every transaction, which is likely to drive even more interest in bitcoin.
Not to be outdone, Square’s rival, PayPal, opened up bitcoin buying and selling to its 350 million users on November 12, 2020.
PayPal CEO Dan Schulman said that the crypto trading volume on its platform “…greatly exceeded our projections” for the final quarter of 2020.
“We’re excited to build on this early success by allowing customers to use their crypto balance as a funding source. … We hope to launch our first international market in the next several months,” he said during the company’s earnings announcement call. PayPal is also pouring more money into its crypto business segment.
Meanwhile, Visa Inc. (V) said it’s partnering with cryptocurrency lending business BlockFi to release a bitcoin rewards credit card early this year.
Even long-time bitcoin skeptics like Ray Dalio, the founder of the $150 billion hedge fund Bridgewater Associates, are changing their tune. Just over a week ago, Dalio said the fund would offer an alt-cash fund in light of sovereign money and credit devaluation, and that bitcoin “…won’t escape our scrutiny.”
Legendary hedge fund manager Paul Tudor Jones has put 1% to 2% of his multi-billion-dollar portfolio into bitcoin, deeming it a store of value and inflation hedge similar in some senses to gold with its finite supply. He also said he’s confident digital currencies will dominate the world’s economies of the future.
Why I Prefer Fundamentally Superior Stocks
While not as widely reported, Monday also marked new record highs for the Dow, S&P 500 and NASDAQ following six consecutive higher market days.
Yes, bitcoin is rocking and rolling right now, but I firmly believe that high-quality stocks with outstanding earnings and revenue growth will perform well, too.
According to FactSet, about 59% of the S&P 500 companies have released results from the most-recent quarter, and 81% of these companies have exceeded analysts’ earnings expectations.
Even more impressive: The S&P 500 has a 15.2% average earnings surprise. That’s well above the five-year average of 6.3%, and it marks the third-highest earnings surprise since 2008. Thanks to the better-than-expected results, S&P 500 companies’ average fourth-quarter earnings gain is 1.7%, which is well above previous forecasts for a 9.3% average earnings decline at the start of the quarter.
If the trend continues, the fourth quarter of 2020 could wind up containing the third-largest earnings surprise percentage since FactSet began tracking the metric in 2008.
My own Accelerated Profits stocks have benefited immensely from positive analyst revisions, as well as wave-after-wave of positive earnings surprises. In fact, as of this writing, 16 Buy List companies have announced results from the latest quarter and every single one of them topped analysts’ earnings estimates. Our average earnings surprise is a whopping 45%!
Thanks in part to the early earnings season results, my Accelerated Profits stocks have also benefited from persistent institutional buying pressure.
The reality is my Accelerated Profits stocks are characterized by 106% average forecasted sales growth and 496% average forecasted earnings growth.
So, as the stock market narrows and grows more fundamentally focused, my Accelerated Profits Buy List stocks should climb on higher trading volume.
This is why I believe that once the excitement over bitcoin fades, and it will, the stock market’s attention will be diverted to companies that are not just posting positive earnings surprises but are also providing strong forecasted earnings and sales growth; i.e., my Accelerated Profits stocks.
As a result, I have been on a buying spree for fundamentally superior stocks in Accelerated Profits. In the past two weeks, I have recommended four new stock picks, and I will also be adding another two stocks for my Accelerated Profits Buy List on Wednesday.
P.S. To learn about the system I use to find these stocks, which I call Project Mastermind, you can watch a special video briefing here. I gave everyone a glimpse of my system and revealed my number-one stock, which is performing quite well after smashing analysts’ expectations for its most-recent quarter. The company reported a whopping 76.9% earnings surprise and 9.5% sales surprise. Click here now for full details.
The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
PayPal Holdings (PYPL), Visa Inc. (V)