Focus on PYPL, SQ & NVDA

In this data-driven world, blockchain-backed cryptocurrency space has gained solid traction on the heels of an increasing bitcoin adoption, the most popular and widely used digital currency.

Although the cryptocurrency market has been on a roller coaster ride in the past two years, it is now scaling new highs with the resurgence in bitcoin trading. Notably, bitcoin has hit a new all-time high by surpassing the $20,000 mark on Dec 16.

Moreover, 2020 has turned out to be favorable for bitcoin and other cryptocurrencies like ethereum, litecoin, ripple, monero and zcash. The coronavirus outbreak taking the shape of a pandemic early this yearhas been benefiting this particular market, with its resulting push toward digital and contactless trading and payments.

This strong bounce-back remains a major positive for online payment companies like PayPal PYPL and Square SQ, which are highly getting involved in cryptocurrency by processing bitcoin transactions.

Further, cryptocurrency resurgence is expected to benefit chipmakers like Intel INTC, Advanced Micro Devices AMD and most importantly NVIDIA (NVDA) which is riding on the strengthening momentum of its graphic processing units (GPUs) among crypto-miners.

Positive Growth Trends

Cryptocurrencies, which hold the potential to revolutionize the process of peer-to-peer and remittance transactions, are gaining strongly from the decentralized system, low fees, transparency of distributed ledger technology, protection from consumer chargebacks,and quick international transfers.

Additionally, the growing demand for alternative currency as a result of the ongoing pandemic remains a tailwind.

All these factors are driving growth in digital currency (especially bitcoin) transactions throughout the world. Per a report from Statista, the number of daily bitcoin transactions at end of third-quarter 2020 exceeded the mark of 351 million, jumping significantly from around 200 million in first-quarter 2016.

Further, a report from Fortune Business Insights shows that the global cryptocurrency market is expected to hit $1.8 billion in 2027 from $754 million in 2019 by witnessing a CAGR of 11.2%.

Here we focus on PayPal, Square and NVIDIA, which have strong fundamentals that poise them well to capitalize on the cryptocurrency boom in the near term.

Year-to-Date Price Performance



PayPal’s Solid Stance

PayPal is one of the well-known bitcoin-related stocks that should be focused on. Notably, the leader in digital payment processes helps merchants to accept crypto payments via partnerships with three major bitcoin payment processors — BitPay, GoCoin and Coinbase.

Further, the company’s recent launch of a service that allows its customers to buy, hold and sell cryptocurrency directly from their PayPal account. Further, this Zacks Rank #3 (Hold) company announced its intentions to enable cryptocurrency as a funding source across its 26 million merchants worldwide.

Moreover, PayPal’s hiring push in early 2020 to boost its new Blockchain Research Group remains noteworthy.

Square’s Aggressiveness

Square announced its plan to enter the market of cryptocurrency at the end of 2017 and forayed into it in 2018 by facilitating the buying and selling of bitcoins via its Cash App. Since then, bitcoin trading has been driving growth in the company’s user base. Moreover, bitcoin revenues have turned out to be the key catalyst behind the company’s top-line growth.

In third-quarter 2020, Square generated revenues of $1.63 billion from the bitcoin category (53.8% of total revenues), rising from $148.3 million in the year-ago quarter.

The Zacks Rank #3 company is continuously gaining from the increasing uptake of Cash App, and strong customer demand and growth in bitcoin activities.

The company’s latest investment of $50 million to purchase 4,709 bitcoins remains a major positive in regard to its strengthening efforts to bolster its presence in the promising cryptocurrency market.

We note that the investment, which increased the company’s bitcoin reserve, will enhance its cryptocurrency offerings.

This, in turn, is expected to accelerate Square’s bitcoin revenue generation in the near term. Additionally, the strengthening bitcoin offering is likely to deliver an enhanced experience to customers of Cash App through which the company facilitates bitcoin trading.

NVIDIA’s Growing Momentum

The growing momentum of NVIDIA’s GPUs in the cryptocurrency space provides the company with a strong competitive edge against other chipmakers.

In third-quarter fiscal 2021, this Zacks Rank #2 (Buy) company experienced solid traction among the ethereum, monero and zcash miners. Reportedly, NVIDIA’s GPU sales to crypto-miners were around $175 million.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Further, the new Ampere GPU chips of the company are well-designed to meet the requirement of the upcoming advanced cryptocurrencies.

We believe that the expanding presence of NVIDIA in the booming cryptocurrency market is likely to contribute well to the stock’s performance in the near term.

Zacks Top 10 Stocks for 2021

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