We recently published a list of the Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024. Since Coinbase Global Inc (NASDAQ:COIN) ranks 6th on the list, it deserves a deeper look.
Wolfe Research said in a note earlier this month that the odds have shifted in favor of Donald Trump following the first presidential debate. However, the firm believes we can see several “unexpected twists and turns” ahead. Wolfe Research also shared a list of stocks that could be potential winners should Donald Trump become the President of the US.
What could happen if Donald Trump becomes President of the US has been a topic of debate and discussion on Wall Street over the past several months. In late January, when the Russell 2000 index jumped, Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, reportedly said that investors might be flocking to the “Trump Trade.” The Russell 2000 is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. Ren said, according to Wall Street Journal, that since Trump is a supporter of low interest rates and less regulation, small-cap stocks, which thrive under Dovish economic policies, were reacting positively to the increasing chances of Donald Trump becoming the leading Republican candidate for the upcoming elections.
In this article, we first scanned Wolfe Research’s basket of stocks the firm believes could be potential winners in case of a Trump presidency. From these stocks we picked 10 companies with the highest number of hedge fund investors.
Why are we interested in the stocks that hedge funds pile into? 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).
Coinbase Global Inc (NASDAQ:COIN)
Number of Hedge Fund Investors: 48
Wolfe Research thinks Coinbase Global Inc (NASDAQ:COIN) is one of the beneficiaries of a possible Trump presidency.
As regulators approve crypto ETFs and Bitcoin continues to gain ground, cryptocurrencies are seeing wide acceptability and moving beyond the stage when they were disregarded as something speculative. Being one of the largest crypto exchanges in the world, Coinbase Global Inc (NASDAQ:COIN) is positioned well to benefit from the growth of crypto. During the first quarter Coinbase Global Inc (NASDAQ:COIN) revenue doubled year over year to roughly $1.59 billion, driven by transactional revenue, subscription revenue and fees.
EPS estimate for Coinbase Global Inc (NASDAQ:COIN) this year is $7.24 per share, representing an astonishing 1,856.73% year-over-year growth. In contrast, the sector median growth is a mere 3.42%. However, Coinbase Global Inc (NASDAQ:COIN) valuation has been a concern for many. The stock’s forward P/E is 31. Given Wall Street’s revenue growth estimate of just 0.70% for next year and earnings growth estimate of -36%, this valuation is high. Analysts also believe the popularity of crypto ETFs and retail investors embracing trading platforms like Robinhood does not bode well for Coinbase Global Inc (NASDAQ:COIN) since investors would prefer to directly invest in crypto ETFs and currencies instead of investing in Coinbase stock.
Coinbase Global Inc (NASDAQ:COIN) is a promising play for those with a higher-risk appetite. However, for those who want to avoid the roller-coaster ride of crypto volatility, the stock might not be a good choice.
Patient Capital Opportunity Equity Strategy stated the following regarding Coinbase Global, Inc. (NASDAQ:COIN) in its first quarter 2024 investor letter:
“This quarter we benefited from our exposure in the cryptocurrency space. The approval of 11 new spot Bitcoin ETFs dramatically opened Bitcoin to new investors for the first time. Investors’ interest was material, with assets under management growing to $55B over a single quarter. Coinbase Global, Inc. (NASDAQ:COIN) was a beneficiary of these events as we believe it is building the foundation of the crypto-ecosystem. We continue to believe COIN has the potential to be the platform for crypto as it has continued to widen its moat by investing throughout the most recent crypto winter.”
Overall, Coinbase Global Inc (NASDAQ:COIN) ranks 6th on Insider Monkey’s list titled Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024. While we acknowledge the potential of Coinbase Global Inc (NASDAQ:COIN), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Coinbase Global Inc (NASDAQ:COIN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
