Ticker Reports for June 14th
Top 5 High-Performance Cryptocurrency ETFs to Watch
The cryptocurrency market has experienced remarkable growth, rewarding investors with its potential. Bitcoin surged by approximately 168%, Ethereum advanced by around 66%, and Solana, a relative newcomer, soared over 100% in the past year. While these returns are undeniably attractive, direct investment in individual cryptocurrencies presents challenges for many investors due to inherent volatility and complexity. For those seeking more structured exposure, cryptocurrency-based electronically traded funds (ETFs) offer a compelling alternative, providing diversification, professional management, and relative ease of access.
Understanding the Mechanics of Cryptocurrency ETFs
An exchange-traded fund (ETF) is an investment fund that holds a basket of assets, such as stocks, bonds, or commodities. It trades on a stock exchange, just like individual company stocks. ETFs offer investors numerous benefits, making them popular for accessing various market segments.
Cryptocurrency ETFs provide a means to gain diversified exposure to the asset class without directly purchasing and managing individual digital assets. This diversification helps mitigate risk compared to investing in a single cryptocurrency. Additionally, ETFs are managed by professional portfolio managers who employ active or passive strategies to navigate the complexities of the crypto market.
ETFs also provide investors with liquidity, enabling easy buying and selling on stock exchanges. Additionally, they offer transparency, as their holdings are publicly disclosed, giving investors insight into the underlying assets of the ETF.
Analyzing 5 High-Performing Cryptocurrency ETFs
The increasing interest in cryptocurrency ETFs has led to the emergence of a diverse range of funds, each with its unique approach to navigating this dynamic market. While all cryptocurrency ETFs offer diversification benefits, not all funds are created equal. Five high-performing ETFs, in particular, have garnered significant attention from investors seeking compelling performance and strategic exposure.
First Trust SkyBridge: Understanding the Benefits and Risks of CRPT
The First Trust SkyBridge Crypto Industry and Digital Economy ETF (NYSEARCA: CRPT) is an actively managed ETF seeking capital appreciation by investing in companies driving innovation within the cryptocurrency industry and digital economy. Sub-advised by SkyBridge Capital, a recognized leader in crypto investing, CRPT's portfolio offers diversified exposure across various segments of the digital asset ecosystem. Top holdings include MicroStrategy Incorporated (NASDAQ: MSTR), a business intelligence company with substantial Bitcoin investments; Coinbase Global, Inc. (NASDAQ: COIN), a prominent cryptocurrency exchange; and Marathon Digital Holdings, Inc. (NASDAQ: MARA), a Bitcoin mining company along with other top cryptocurrency stocks.
CRPT's actively managed approach, coupled with its focus on high-growth companies, offers the potential for strong returns but comes with the risk of higher volatility compared to passively managed ETFs. The fund's expense ratio is 0.85%, CRPT has a market capitalization of $61.51 million, and assets under management of $62.61 million.
Performance-wise, CRPT has returned 191.91% over the past year and 45.50% year-to-date. Analyst ratings aggregate to a "Moderate Buy" with a price target of $15.98, representing a potential 14.30% upside from its current price.
Valkyrie: Key Considerations for Bitcoin and Ether Strategy ETF
Valkyrie Bitcoin and Ether Strategy ETF (NASDAQ: BTF) is an actively managed fund that focuses on future contracts between Bitcoin and Ethereum. Futures contracts are agreements to buy or sell an asset at a predetermined price at a future date. BTF's strategy involves investing in these contracts, allowing the fund to potentially benefit from price movements in Bitcoin and Ethereum without directly holding the underlying cryptocurrencies.
This approach carries its own set of considerations. Futures contracts can amplify volatility, both on the upside and downside. While BTF has delivered strong performance, up 100% in the past year and 28% in the past six months, investors should be aware that futures-based strategies can be more complex and carry a higher degree of risk. BTF also has a low liquidity rating due to its smaller asset size, meaning that it may be more challenging to buy or sell shares of the fund. The fund has $52 million under management compressed into three holdings, adding a small amount of risk.
Notably, BTF offers an impressive 11.11% dividend yield, significantly exceeding the ETF average of 2.5%. This strong dividend, driven by the performance of its Bitcoin and Ether futures contracts, makes BTF an appealing option for income-seeking investors within the crypto space. However, it's important to remember that dividend yields can fluctuate and are not guaranteed.
Grayscale Digital: Investing in Large-Cap Cryptocurrencies with GDLC
Grayscale Digital Large Cap Fund ETF (OTCMKTS: GDLC) is a passively managed ETF that tracks an index of large-cap cryptocurrencies. It offers investors broad exposure to the leading digital assets by market capitalization. GDLC has a significant weighting towards Bitcoin (70%), reflecting the cryptocurrency's dominance in the market. The fund's remaining holdings include Ethereum (23%), Solana, Ripple, and Avalanche, providing a degree of diversification.
GDLC's performance has been impressive, gaining 317% in the past year and nearly 40% in the past six months. This strong track record and its passive index-tracking approach make GDLC a popular choice for investors seeking straightforward exposure to large-cap cryptocurrencies.
However, it's important to note that GDLC has a relatively high expense ratio of 2.50%. Furthermore, GDLC is traded on the OTC market, presenting its own risks. These risks include lower liquidity, wider bid-ask spreads, and potentially less regulatory oversight than exchanges like the NYSE or Nasdaq. Investors should consider these factors and the general volatility of cryptocurrencies before investing in GDLC.
Grayscale Bitcoin Trust ETF Market Insights
The Grayscale Bitcoin Trust ETF (NYSEARCA: GBTC) is a passively managed exchange-traded fund designed to expose investors directly to Bitcoin's price movements. Its passive investment strategy replicates Bitcoin's performance, making it a straightforward investment vehicle for those seeking Bitcoin exposure without actively managing their holdings.
GBTC boasts a substantial market capitalization of $30.34 billion and has a history of strong trading volume, averaging 13.52 million shares, ensuring high liquidity for investors. Despite its strong one-year performance of 345.78% and ease of trading, GBTC carries a net expense ratio of 1.50%, higher than the average for an ETF.
Institutional investors have shown significant interest in GBTC, with 266 institutional buyers contributing to a total inflow of $689.42 million over the past year, compared to minimal outflows. This substantial institutional interest further highlights the ETF's appeal as a prominent vehicle for accessing the Bitcoin market.
Bitwise Crypto Industry Innovators ETF Performance Metrics
The Bitwise Crypto Industry Innovators ETF (NYSEARCA: BITQ) is a passively managed ETF designed to track the Bitwise Crypto Innovators 30 index. This index comprises a modified market-cap-weighted portfolio of global companies actively engaged in developing and supporting a decentralized economy enabled by crypto assets.
The fund's primary investment objective is to mirror the performance of the underlying index, providing investors with broad exposure to the crypto industry ecosystem. BITQ holds a diversified portfolio of 36 companies, with its top holdings concentrated in prominent names such as MicroStrategy, Coinbase Global, Core Scientific (NASDAQ: CORZ), and Marathon Digital Holdings.
The fund has an asset under management (AUM) of $145.80 million and charges a net expense ratio of 0.85%. BITQ's performance has been strong, with a 1-year return of 105.89% and a six-month performance of over 35%. While the fund's average daily volume of 167,000 shares is relatively low, it is adequate to ensure sufficient liquidity for shareholders.
Strategic Considerations for Portfolio Allocation
These five cryptocurrency ETFs cater to investors with varying risk appetites and investment strategies. The First Trust SkyBridge Crypto Industry and Digital Economy ETF is actively managed and seeks capital appreciation through companies at the forefront of the crypto revolution. Its focus on high-growth companies, coupled with SkyBridge Capital's expertise, makes CRPT an enticing option for investors seeking potentially high returns despite the inherent risk of market volatility.
The Valkyrie Bitcoin and Ether Strategy ETF differs in that it leverages future contracts between Bitcoin and Ethereum. This strategy allows for potentially outsized gains but amplifies the risk of losses. BTF's high dividend yield of 11.11% also attracts income-seeking investors, although this is subject to market fluctuations.
Taking a passively managed approach, the Grayscale Digital Large Cap Fund ETF offers exposure to a basket of established cryptocurrencies heavily weighted towards Bitcoin. While its strong performance and broad exposure are appealing, the high expense ratio and trading on the OTC market might deter some investors.
The passively managed Grayscale Bitcoin Trust ETF focuses solely on Bitcoin, offering straightforward exposure to the dominant cryptocurrency. GBTC's high liquidity and strong performance make it popular, but its higher-than-average expense ratio requires careful consideration.
Finally, the Bitwise Crypto Industry Innovators ETF (BITQ) tracks the performance of companies supporting the decentralized economy. With a diversified portfolio and strong returns, BITQ offers a balanced approach.
Due to crypto ETFs' inherent volatility, it's crucial to approach them as a strategic allocation, not a core holding. The percentage allocated to crypto ETFs should align with an investor's risk tolerance. Investors with a higher risk appetite may allocate a larger portion of their portfolio to crypto ETFs, while those with a lower risk tolerance may opt for a smaller allocation.
Cryptocurrency ETFs have emerged as a gateway to the crypto market, offering diversified exposure and professional management. As the crypto sector evolves, ETFs will be crucial in providing accessible investment vehicles for this burgeoning asset class. Continued innovation and regulatory clarity will shape the future trajectory of cryptocurrency ETFs, potentially revolutionizing how investors engage with the digital asset market. With the potential for significant growth and mainstream adoption, cryptocurrency ETFs are poised to become an integral part of the modern investment landscape.
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3 Stocks That Plummeted After the Post-Fed Speech Crash
Whenever the Federal Reserve (the Fed) speaks, the whole market, the global financial market, watches closely. A single shift in sentiment and approach to where interest rates may be headed could send markets swinging in either direction, and that’s where investors can begin to look for opportunities. Today, three stocks were caught crashing hard after the Fed’s recent speech, and they are worth looking at.
In this group, it is stocks like Airbnb Inc. (NASDAQ: ABNB), The Hershey Co. (NYSE: HSY), and even Nike Inc. (NYSE: NKE) that traded down to potentially attractive levels for investors to start considering them for a watchlist. However, price action is only the starting filter for these investors to start their due diligence, as they should consider how what the Fed thinks can affect these businesses in the future.
What started as a proposal for four interest rate cuts beginning in March 2024, kickstarting the S&P 500 into a new all-time high, has now become a potential single rate cut as far back as November of this year, assuming no more changes and postponement is made. Here’s why the dip in these stocks is not truly justified.
Why the Fed's Postponed Rate Cuts Don't Impact These Stocks' Value
Keeping logic front and center, why would the value of these businesses need to swing by so much if half of 2024 has already gone through no interest rate cuts? Making a single rate cut, or potentially none, won't significantly affect the company's financials.
Despite all this, here's why these stocks may be attractive today. Airbnb stock trades at 85% of its 52-week high, even after reporting improving financials in the company's latest quarterly financials. Hershey's stock is now down to 71% of its 52-week high, unjustifiable for arguably the strongest candy brand in the consumer discretionary sector.
Last, Nike’s 76% of its 52-week high makes for a potential once-in-a-generation opportunity to watch Nike stock at today’s 24.6x forward P/E valuation, its lowest since 2018.
How Higher Rates Are Actually Boosting Airbnb Stock to New Levels
Because the average home price in the United States is now roughly 32% higher than it used to be before the COVID-19 pandemic, most would-be home buyers have now been priced out of the marketplace. Higher mortgage rates, around 7.3% today, have given the real estate sector another hit.
On the other hand, rental inflation is reported to be one of the most significant factors affecting the sticky inflation rate, which is why the Fed is staying away from interest rate cuts today. So, who else can they look to if people find it harder to buy and rent?
Airbnb’s long-term stays are one answer. Because these stays are already furnished and offer flexible rates and dates, people can use the service to cushion the rental and mortgage storm. The first quarter earnings results show this trend for Airbnb stock.
Long-term stays of three months or longer increased roughly 25% over the year, and that trend is expected to continue as long as the Fed keeps postponing these rate cuts. This is one reason why TD Cowen analysts see the stock going higher by 17.5% to $170 a share.
Investors Should Focus on Hershey's Return on Capital During Market Dips
According to the company’s financials, Hershey’s return on invested capital (ROIC) rates hover between 17% and 19% over time, one of the many reasons investors should watch the stock every time it takes a dip.
Why? Annual stock price performance tends to follow the long-term ROIC rate, meaning that today’s forward P/E ratio of 19.5x, the lowest since 2015 (ex. COVID), is one of the best opportunities for investors to consider in this stock.
Analysts at Argus think the stock is worth up to $225, daring it to rally by 20.5% from its current low. However, these analysts weren’t the only ones on Wall Street who found the stock attractive.
The Vanguard Group, Hershey’s largest shareholder, took advantage of this dip recently, boosting its position in the stock by 14.2% as of May 2024, bringing its net investment to $3.4 billion.
The Role of Nike's Global Presence in De-Risking Rate Cut Postponements
Even if investors are convinced that the Fed’s delay in rate cuts is terrible for already beaten-down stocks, here’s a perfect example of Nike’s global reach.
Because the brand has significantly penetrated global markets, its revenue streams are diversified away from the U.S. retail sector. Even if there are zero rate cuts this year, Nike can still count on European and Asian markets to compensate for the North American headwind.
Still, even with higher interest rates, Nike’s most recent quarterly earnings results show a rise of 3% in net North American revenues. Because of this ability to cushion the cycle, analysts at Robert W. Baird see a price target of $125 a share, or 33.5% higher than today’s compressed prices.
That is also why Lazard Asset Management decided to boost its stake in Nike stock by 7.9% as of May 2024, bringing the investment firm’s net investment in Nike stock up to $300.8 million today.
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Adobe Stock: It's Not Too Late To Buy The Dip
The price correction in Adobe (NASDAQ: ADBE) stock experienced over the past two quarters was not unwarranted. The company’s AI prospects aside, the results were solid but failed to show the boost seen in other prominent AI players, including NVIDIA (NASDAQ: NVDA), Micron (NASDAQ: MU), Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), Alphabet (NASDAQ: GOOGL) and Oracle (NYSE: ORCL). However, the company’s quality and value to investors never wavered, leading to a buying opportunity still in play.
Better-than-expected Q2 results, driven by strength in all segments and product lines, spurred the analysts to raise targets and lead the market higher. Based on the chatter, this stock could rise to retest this year’s highs quickly and then continue to rise and retest the all-time highs by the year’s end. Assuming the subsequent quarters reveal the same strengths as Q1, the trend in analysts' sentiment and the stock price should continue and push this stock to a new all-time high within the next twelve to eighteen months, a gain worth 40% to 50% from the $520 level.
Adobe Surges On Solid Results, Cloud and AI Demand
Adobe had a stellar quarter, setting record revenue with a 10.2% YoY increase driven by strengths in both operating segments, outpacing the consensus estimate by a few dozen basis points. The $5.13 billion in net revenue is driven by an 11% gain in Digital Media offset by a slightly slower 9% growth in Digital Experience. Demand centers on Creative Cloud, Digital Cloud, and Enterprise Cloud solutions, including Premier Pro, Animate, and After Effects.
Client counts and deepening penetration, compounded by pricing efforts, aided the top-line strength. Adobe raised prices in 2023, causing some concern among analysts because its products were already selling at premium prices compared to competitors. The takeaway is that product differentiation and utility offset the price increases; clients are flocking to Adobe because it is the premier product.
Margin news is better. The company’s gross and operating margins improved compared to last year, driving leveraged growth on the bottom line. The operating income is up 16%, the GAAP net income is up 21.5%, and the adjusted net income is up 12.75% compared to the 10% top-line gain. The result is a 23% increase in GAAP EPS and a 14.5% increase in adjusted EPS and positive cash flow despite reinvestment and accelerated share repurchases. Regarding consensus, the $4.48 in adjusted EPS is a dime ahead of the MarketBeat.com consensus and led management to raise guidance.
The guidance is the best news in the report. The company raised its guidance for the year, aligning the revenue target with the consensus estimates and the EPS targets with outperformance. The company expects Q2 and full-year EPS to exceed the analysts' targets, providing a tailwind for the market.
The Analysts Lead Adobe to Record Highs
Analysts trimmed their targets for Adobe early in 2024, but that trend is over. The post-release activity includes an upgrade from JPMorgan Chase to Overweight from Neutral and numerous price target increases. There are no downgrades or price target reductions. Several price target increases are below the consensus, but details include a higher low-end range, a rising consensus estimate, and the bulk of targets above the consensus. Consensus assumes a 35% upside and a retest of the 2024 highs; the bulk of fresh targets assume a range above the consensus.
The technical action is promising. Adobe stock is winding up within a secular-grade triangle pattern and has confirmed support at the middle of the range. This suggests upward movement and a retest of the triangle’s upper limit, if not the range top, which is near $700. Assuming the company continues to perform as expected, a new high is likely.
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