In this article, we examine the 7 most undervalued blockchain stocks to buy, according to analysts.
Transforming finance: The impact of blockchain technology
The blockchain industry is witnessing significant trends that will shape its future and expand its use cases across various sectors. One of the most notable trends is the growth of decentralized finance (DeFi). Decentralized Finance (DeFi) is transforming the traditional financial system by providing peer-to-peer financial services on public blockchains without intermediaries.
Established financial institutions are increasingly adopting blockchain technology to increase transparency and efficiency. According to a report by The Business Research Company, the global market for blockchain in banking and financial services is valued at $4.61 billion in 2023. This market is expected to expand significantly at a compound annual growth rate (CAGR) of 40.4% in 2024. In 2028, it is expected to reach $27.69 billion by the end of the forecast period.
According to the 2024 Cryptocurrency Geography Report by American blockchain analysis company Chaineries, global cryptocurrency activity is on the rise. From Q4 2023 to Q1 2024, total global crypto activity increased significantly, surpassing levels seen during the 2021 crypto bull market.
In January 2024, the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded fund (ETF), marking a significant milestone for the crypto market. This approval led to a surge in Bitcoin activity across all regions, especially those with institutional-scale remittances and high-income countries such as North America and Western Europe. Meanwhile, stablecoin usage saw higher growth in retail and occupational remittances, particularly in low-income regions such as sub-Saharan Africa and Latin America. The Crypto Geography report also shows strong year-on-year growth in DeFi services, particularly in regions such as Sub-Saharan Africa, Latin America, and Eastern Europe.
Cryptocurrency investing is becoming more mainstream, with Bitcoin ETFs being institutionalized. However, blockchain technology and tokenization also have the potential to disrupt the traditional ETF model. On September 28, CNBC reported that Janus Henderson, one of the world’s leading asset management groups, announced the launch of Anemoi Liquid Treasury Fund (LTF), a tokenized fund that provides investors with direct access to short-term funds in the United States. It was reported that they have announced a partnership with Anemoi Limited and Centrifuge for the launch. Treasury bills. Nick Charney, head of innovation at Janus Henderson, emphasized that the development does not represent a threat to the ETF industry, but rather an evolution in providing investment services to clients more efficiently.
This new fund maintains the typical features of an ETF while allowing trading on blockchain platforms. This provides investors with benefits over those offered by traditional ETFs, including 24/7 trading, instant settlement, and increased transparency regarding fund holdings. Charney said the company aims to be at the forefront of this opportunity, which reflects the broader trend of integrating blockchain into financial services.
These trends highlight the growing interest in blockchain technology and its potential to reshape financial systems around the world.
With this background in mind, let’s take a look at the 7 most undervalued blockchain stocks to buy, according to analysts.
methodology
To compile our list of the 7 most undervalued blockchain stocks to buy, according to analysts, we reviewed our own rankings, screened ETFs, and consulted various online resources. . From an initial pool of over 30 stocks related to the blockchain space, we focused on stocks trading at less than 23 times forward earnings as of October 4th. This helped identify stocks that were cheaper than the S&P 500 index with expected P values. /E is 23.6 as of October 4th (according to WSJ).
We included only stocks that are estimated to have positive earnings growth this year. From this list, we selected stocks that analysts believe have the greatest growth potential. Finally, we ranked the 7 most undervalued blockchain stocks to buy, according to analysts, based on average price target upside potential as of October 4, 2024.
We also noted hedge fund sentiment surrounding each stock, pulled from Insider Monkey’s database of 912 elite hedge funds as of Q2 2024.
Why do we care what hedge funds do? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
The 7 most undervalued blockchain stocks to buy, according to analysts
7. Nu Holdings Ltd. (NYSE:NU)
Expected PER: 22.32
Revenue growth rate: 72.00%
Analyst upside potential: 13.38%
Number of hedge fund holders: 59 people
Nu Holdings Ltd. (NYSE:NU) is one of the world’s largest digital banking platforms, serving more than 100 million customers in Brazil, Mexico, and Colombia. The company offers a variety of services including credit cards, digital accounts, and cryptocurrency trading.
Recently, the company launched a cryptocurrency transfer feature that allows customers to send and receive Bitcoin, Ethereum, and Solana directly from their wallets. This innovative service is designed to give users more control over their crypto assets while maintaining competitive fees through a unique pricing model that stabilizes blockchain fluctuations. To ensure security and compliance, Nu Holdings Ltd. (NYSE:NU) works with Chainaracy to monitor transactions and protect against illegal activity.
On June 25, 2024, Nu Holdings Ltd. (NYSE:NU) announced a partnership with Lightspark to integrate Bitcoin’s second layer blockchain, the Bitcoin Lightning Network, into its platform. This collaboration aims to enhance the Nu app by enabling faster and more cost-effective transactions for customers. As part of this agreement, engineering teams from both companies will collaborate to explore new blockchain solutions. Lightning integration allows Nubank to offer innovative features that improve the user experience. With this move, the company strengthens its commitment to providing efficient financial services and positions itself as a leader in the evolving blockchain environment.
Overall, the company has shown impressive growth in its business operations, reaching 105 million customers by the end of Q2 2024, an increase of 60% compared to two years ago. The company continues to perform well in Brazil, adding an average of 1.2 million new customers every month, bringing its total number of customers in the region to 95.5 million. Mexico also grew, adding 1.2 million new customers in the quarter for a total of 7.8 million customers. Columbia passed the 1 million customer milestone and ended the quarter with approximately 1.3 million customers. This growth has solidified Nu’s position as Latin America’s leading digital financial platform.
The company reported second-quarter 2024 revenue of $2.8 billion. This reflects a 65% year-over-year increase due to successful cross-selling, up-selling, and new product introductions. Gross profit reached $1.4 billion, an impressive 88% year-over-year growth, resulting in a gross profit margin of 47.7%. Net income reached $487 million, an increase of 134% year over year, and adjusted net income reached $563 million, an increase of 131% year over year.
Nu Holdings Ltd. (NYSE:NU) has established a strong business model centered on consistent customer growth, innovative product offerings and efficient operations. Analysts also have a bullish view on NU, with a consensus rating of Buy for the stock. The median 12-month price target set by analysts indicates a potential upside of 13.38% from current levels.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 59 hedge funds held shares in New Holdings (NYSE:NU). As of June 30, Berkshire Hathaway held 107.11 million shares of the company’s stock, valued at $1.38 billion, making it NU’s largest shareholder.
6. WisdomTree Co., Ltd. (NYSE:WT)
Expected PER: 14.47
Revenue growth rate: 67.60%
Analyst upside potential: 26.39%
Number of hedge fund holders: 20 people
WisdomTree Inc. (NYSE:WT) is a global financial innovator that leverages blockchain technology to provide a variety of exchange traded products (ETPs), solutions and services. The company has developed and launched innovative digital products, services and structures that enhance access, transparency and user experience. These include the company’s digital or blockchain-enabled mutual funds and tokenized assets, as well as its blockchain-native digital wallet, WisdomTree Prime.
On September 18, 2024, the company launched WisdomTree Connect, a new platform designed to provide broad access to tokenized real-world assets (RWA). This innovative platform aims to allow users to interact with any token issued by WisdomTree within any wallet, across supported blockchains. Users can access WisdomTree digital funds using their own wallet infrastructure, including corporate and institutional customers. The platform will give companies direct on-chain access to yield-producing products like the WisdomTree Government Money Market Digital Fund. The solution streamlines the investment process and makes asset management easier for crypto-native institutions without the need to first convert stablecoins to fiat.
In the second quarter of 2024, WisdomTree, Inc. (NYSE:WT) posted strong financial performance with record assets under management (AUM) of $109.7 billion. The company reported revenue of $107 million, up 25% year-over-year, driven by higher average assets under management. Operating margin expanded significantly to more than 35%, and earnings per share increased 78% year-on-year.
The company actively pursues both business-to-business (B2B) and direct-to-consumer initiatives. In its Q2 2024 earnings call, management shared that the company’s direct-to-consumer app, WisdomTree Prime, is now available in 44 states and reaches nearly 80% of the U.S. population.
WisdomTree Inc.’s (NYSE:WT) effective strategy and operational efficiency have enabled it to establish itself as a key player in the evolving blockchain finance landscape. It ranks as one of the most undervalued stocks in the blockchain space.
WT is considered undervalued at current levels. It trades at 14 times expected earnings. Additionally, analysts have a consensus Buy rating on the stock. The median 12-month price target set by analysts indicates a potential upside of 26.39% from current levels. WisdomTree Inc. (NYSE:WT) was held by 20 hedge funds in Q2 2024.
