We recently published a list of 7 Most Undervalued Blockchain Stocks To Buy According To Analysts. In this article, we are going to take a look at where Riot Platforms Inc. (NASDAQ:RIOT) stands against the other most undervalued blockchain stocks to buy according to analysts.
Transforming Finance: The Impact of Blockchain Technology
The blockchain industry is witnessing significant trends that are shaping its future and expanding its use cases across various sectors. One of the most notable trends is the growth of Decentralized Finance (DeFi), which is transforming traditional financial systems by providing peer-to-peer financial services on public blockchains without intermediaries.
Established financial institutions are increasingly adopting blockchain technology to enhance transparency and efficiency. According to a report by The Business Research Company, the global market for blockchain in banking and financial services was valued at $4.61 billion in 2023. The market is expected to expand significantly at a compound annual growth rate (CAGR) of 40.4% during 2024-2028 to reach a value of $27.69 billion by the end of the forecast period.
According to the 2024 Geography of Cryptocurrency Report by Chainalysis, an American blockchain analysis firm, global crypto activity is on the rise. Between Q4 2023 and Q1 2024, the total value of global crypto activity increased significantly to surpass levels seen in 2021 during the crypto bull market.
In January 2024, the US Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded funds (ETFs), marking a significant milestone for the cryptocurrency market. This approval led to a surge in Bitcoin activity across all regions, particularly in institutional-sized transfers and in regions with higher-income countries like North America and Western Europe. Meanwhile, stablecoin usage saw higher growth among retail and professional transfers, especially in lower-income areas such as Sub-Saharan Africa and Latin America. The Geography of Cryptocurrency Report also shows that DeFi services have seen substantial year-over-year growth, especially in areas like Sub-Saharan Africa, Latin America, and Eastern Europe.
Crypto investing is becoming more mainstream and institutionalized with Bitcoin ETFs. However, blockchain technology and tokenization also have the potential to disrupt the traditional ETF model. On September 28, CNBC reported that Janus Henderson, a leading global asset management group, has announced a partnership with Anemoy Limited and Centrifuge to launch the Anemoy Liquid Treasury Fund (LTF), a tokenized fund that provides investors direct access to short-term US Treasury bills. Nick Cherney, head of innovation at Janus Henderson, emphasized that this development represents an evolution in delivering investment services to clients more efficiently rather than a threat to the ETF industry.
This new fund will retain the typical features of an ETF while enabling trading on a blockchain platform. This offers investors benefits like 24/7 trading, instant settlement, and enhanced transparency regarding fund holdings, surpassing what traditional ETFs provide. Cherney stated that the firm aims to be at the forefront of this opportunity, which reflects a broader trend of integrating blockchain into financial services.
These trends highlight the growing interest in blockchain technology and its potential to reshape financial systems worldwide.
Methodology
To compile our list of the 7 most undervalued blockchain stocks to buy according to analysts, we reviewed our own rankings, sifted through ETFs, and consulted various online resources. From an initial pool of over 30 stocks involved in the blockchain space, we focused on those trading at under 23 times their forward earnings as of October 4. This helped us identify stocks that are cheaper than the S&P 500 Index, which has a forward P/E of 23.6 as of October 4 (as per WSJ).
We included only those stocks that are estimated to have positive earnings growth this year. From this list, we selected the stocks that analysts believe possess the greatest potential for growth. Finally, we ranked the 7 most undervalued blockchain stocks to buy according to analysts based on their average price target upside potential as of October 4, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A computer engineer working in a futuristic office, programming algorithms to mine cryptocurrency.
Riot Platforms Inc. (NASDAQ:RIOT)
Forward P/E: 20.88
Earnings Growth: 203.60%
Analysts’ Upside Potential: 129.30%
Number of Hedge Fund Holders: 12
Riot Platforms Inc. (NASDAQ:RIOT) ranks second on our list of the most undervalued blockchain stocks to buy according to analysts. Primarily focused on Bitcoin and general blockchain technology, Riot is one of the most prominent Bitcoin mining companies. It supports the Bitcoin blockchain through large-scale mining operations in the United States. The company also has electrical switchgear engineering and fabrication operations in the US state of Colorado.
The company is actively developing its Corsicana Facility, which will ultimately have a total capacity of 1 gigawatt (1,000 MW). In September, Riot Platforms Inc. (NASDAQ:RIOT) completed the third building of Phase 1, increasing the facility’s power capacity to 300 MW.
Riot Platforms has shown impressive growth in its Bitcoin mining operations, recently mining 412 BTC in September 2024, which is a 28% increase from August. This brings the company’s total Bitcoin holdings to 10,427 BTC, positioning it as one of the largest holders among public mining companies. The rise in production was driven by an increase in the average operating hash rate across all of the company’s facilities, showcasing Riot Platforms Inc.’s (NASDAQ:RIOT) commitment to expanding its mining capabilities and optimizing its infrastructure.
In the second quarter of 2024, Riot Platforms Inc. (NASDAQ:RIOT) reported $55.8 million in Bitcoin mining revenue, reflecting a 12% increase compared to the same period last year. The company also achieved an engineering gross profit of $1.4 million, up from $1.1 million in Q2 2023. These financial results indicate that Riot is successfully expanding its mining operations to enhance its profitability.
In July, Riot Platforms Inc. (NASDAQ:RIOT) made a strategic move by acquiring Block Mining, a privately held Bitcoin miner based in Kentucky. This acquisition adds 60 megawatts of operational capacity, with the potential to expand to 110 megawatts this year. This acquisition allows the company to diversify its operations into new energy markets while also enhancing its growth trajectory in the Bitcoin mining sector.
With its strategic expansions and strong performance, Riot Platforms Inc. (NASDAQ:RIOT) has positioned itself as an attractive investment opportunity. RIOT is trading at over 20 times its forward earnings. As of the second quarter of 2024, the stock is held by 12 hedge funds. Analysts are also bullish on RIOT. The 12-month median price target for the stock set by analysts indicates a potential upside of 129.30% from the current stock price.
Overall RIOT ranks 2nd on our list of most undervalued blockchain stocks to buy according to analysts. While we acknowledge the potential of RIOT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RIOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.