We recently compiled a list of the 10 Most Promising Future Stocks According to Analysts. In this article, we are going to take a look at where Coinbase Global, Inc. (NASDAQ:COIN) stands against the other Most Promising Future Stocks According to Analysts.
Rising Market Volatility
Volatility in the equity markets is poised to hit levels not seen for the better part of the year as investors battle a string of developments. The uncertainty around the upcoming US elections and the soaring geopolitical tensions in the Middle East are the latest headwinds sending shockwaves in the market.
A report by MarketWatch indicates that October could turn out to be a spooky month for equities as valuations appear overstretched, with major indices at all-time highs. Analysts are no longer ruling out the prospects of a market crash given that recession fears are rising even though inflation levels have dropped significantly, prompting the Federal Reserve to cut interest rates.
READ ALSO: 10 Most Promising Growth Stocks According to Hedge Funds and David Einhorn Stock Portfolio: Top 10 Stocks to Buy.
While expectation is high that the US economy will achieve a soft landing on higher interest rates, leading to lower inflation without causing a major hit to the economy, Michael Darda, chief economist and macro strategist at Roth Capital Partners, is sounding warning bells.
The economist maintains we are marching on ice that’s a bit thinner, depicted by rising unemployment and elevated earnings expectations that triggered market routes in August and September.
“It’s not unprecedented to have a slowdown period that looks like a soft landing, and then a recession ends up taking shape,” he said. “That’s sort of unexpected now because many have been lulled into this idea that the soft landing is going to be a permanent state of affairs for the business cycle. Equity market valuations reflected that coming into the summer.”
“But there’s been some cracks in the business cycle,” he cautioned, noting expectations for the economy, corporates, and the stock market have remained at “super high” levels.
A slowdown in the US economy amid the high interest rate environment comes amid a highly charged election that threatens to rattle the stock market. While indices are at all-time highs at the back of one of the longest bull runs, the prospects of a deep pullback are growing as investors become more cautious ahead of the election.
While the US stocks have often rallied following a major US election, Former Goldman Sachs partner Abby Joseph Cohen believes things could turn around this time around.
“Historically when you go back many cycles you see that the US stock market does pretty well after a major election. There is a sigh of relief and also most people feel that their candidate has won. This year aim not convinced it is going to be a sigh of relief rally. In fact if anything I am quite concerned about what happens if there is agitation of any sort following the election because of uncertainty about results,” Cohen said.
Although there is a good chance that the US stock market will crash this time, many analysts are also saying that things might improve following a very bad September that also saw premium stocks like the S&P 500 plummet and hit all-time lows.
AI-related firms continue to drive market gains, with the S&P 500 up 21% year-to-date. Howard Chan, CEO of Kurv Investment Management, highlighted the importance of monetizing AI initiatives, noting Meta’s share price surge due to strong sales growth.
Analysts are increasingly focusing on promising future stocks, particularly those in advanced technologies, which are expected to withstand short-term pressures and deliver long-term value. Investing in industry leaders with a competitive edge and a strong track record of revenue and earnings growth, combined with low interest rates, is seen as a strategy likely to yield significant returns. Despite market volatility, certain stocks continue to offer substantial opportunities and the potential to generate significant long term value.
Our Methodology
To make our list of the most promising future stocks to buy according to analysts, we made a list of 40 stocks with market capitalization greater than $10 billion, significant average analyst share price percentage upside, and an average rating of Buy or better. They were then ranked in ascending order based on analyst’s upside potential, and the most promising future stocks are as follows.
At Insider Monkey, we are obsessed with 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 Holders as of Q2: 45
Analyst Upside as of October 10, 2024: 53.59%
Coinbase Global, Inc. (NASDAQ:COIN) is a promising stock, given its focus on future technologies and innovations in the cryptocurrency space. Operating as a financial services company, it provides crucial infrastructure and technology for the crypto economy. It also provides technology and services that enable developers to build crypto products and securely accept crypto assets as payment.
Coinbase Global, Inc. (NASDAQ:COIN)’s core business is closely tied to the overall condition of the cryptocurrency market. Therefore, when the market is experiencing widespread growth, Coinbase is likely to follow suit and generate significant value.
Over the years, Coinbase Global, Inc. (NASDAQ:COIN) has generated a significant chunk of its revenues from transaction fees. Consequently, the company’s earnings take a hit whenever there is a downturn in the sector. Fast forward, Coinbase has diversified its revenue base by reducing its reliance on transaction fees.
A key element in this shift has been Coinbase’s growth in its Subscription and Services division, which includes stablecoin interest, fees for holding assets, and rewards for holding digital assets. Although transaction revenue was down 27% in Q2 from last quarter, subscription and services revenue was found to be at an all-time high, growing 17% quarter-over-quarter to $599 million.
The future prospects for Coinbase Global, Inc. (NASDAQ:COIN) are rooted in the growing acceptance of digital currencies by both individual and institutional investors. In the past, individual investors have been the main force behind the movement of cryptocurrency and Coinbase.
Yet, as the cryptocurrency market evolves, institutional investors are beginning to participate, bringing along substantial financial resources. Coinbase’s approach to serving these two groups is clear in its continuous work to improve individual investors’ experience and establish itself as a reliable ally for institutions.
Consequently, based on 15 Wall Street analysts, Coinbase Global, Inc. (NASDAQ:COIN) is a strong Buy with an average price target of $258.17, implying a 53.59% change from the last price of $168.09. As of Q2 2024, the stock was held by 45 hedge funds, while Citadel Investment Group was the most dominant shareholder.
Overall COIN ranks 1st on our list of 10 Most Promising Future Stocks According to Analysts. While we acknowledge the potential of COIN 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 timeframe. If you are looking for an AI stock that is more promising than COIN, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
