The best blockchain stocks to buy in 2018 are not upstart IPOs or opportunistic companies that simply added the word "blockchain" to their name last year.
But those aren't the only two we'll bring you today. In fact, we have five of the best blockchain stocks you can buy now.
These companies are harnessing blockchain technology to create real-world solutions for existing problems. They realize the vast opportunity that lies before them and would rather lead than be left behind.
Blockchain is the technology that underpins cryptocurrencies like Bitcoin. It's a shared digital ledger that verifies and stores all transactions on a network.
But while blockchain is rooted in cryptocurrencies, most of its applications do not depend on the prices of cryptocurrencies. Whether cryptos soar or crash, blockchain tech will endure.
And the applications for blockchain technology span far beyond cryptos...
Why Blockchain Tech Is a Gold Mine
"Blockchain holds the promise to fundamentally transform how business is done, making business-to-business interactions more secure, transparent, and efficient," Amit Zavery, senior vice president of Oracle Inc.'s (NYSE: ORCL) cloud platform, said in a statement.
In a 2015 survey of 800 information and communications executives and experts, more than half - 57.9% - said they believed 10% of the world's gross domestic product will be stored on the blockchain by 2027. That's the equivalent of more than $10 trillion.
What does that mean for blockchain businesses? Wintergreen Research estimates the market for blockchain products and services will explode from $708 million last year to $60.7 billion by 2024.
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"Blockchain is one of the bright sectors in technology," Roger Kay, president of Endpoint Technologies Associates Inc., told Bloomberg. "Since blockchain infrastructure is fairly beefy, there will be a large pool of revenue associated with sales of equipment, software, and related services for blockchain installations."
Here are just a few of the things businesses can do with blockchain technology, as compiled by Oracle:
- Banking and finance: KYC (know your customer), clearing and settlement, and loan origination, as well as domestic and cross-border payments.
- Manufacturing: Design IP protection, product history tracking, and recalls management.
- Supply chain: Supply chain finance, track and trace point of origin, ownership transfer, compliance monitoring.
- Healthcare and pharma: Serialized track/trace of drugs, digital regulatory submission, clinical trial management, and privacy and sharing of patient health records.
- Utilities: Asset management, certification of renewable energy and emission allowances, and metering and billing of electricity consumption.
- Retail & Commerce: Increase transparency of histories of products, reduction of counterfeit goods, warranty adjudication, and supply chain management modernization.
Blockchain tech is already seeping into multiple sectors. For instance, BP Plc. (NYSE:BP) and Royal Dutch Shell Plc. (NYSE: RDS.A) announced the formation of a consortium last November that will use blockchain tech to track oil trading.
And earlier this month, UnitedHealth Group Inc. (NYSE: UNH) and Humana Inc. (NYSE: HUM) launched a pilot program to use blockchain tech to share data across healthcare organizations, with the goal of improving data accuracy and access to care.
Adapting the blockchain to make businesses more efficient will be one of the greatest profit opportunities of the 21st century.
And these five companies are at the forefront of this coming blockchain boom...
The 5 Best Blockchain Stocks to Buy in 2018
- Microsoft Corp. (Nasdaq: MSFT): Microsoft clearly learned its lesson from missing out on the mobile computing boom triggered in 2007 by the debut of the iPhone. It launched its blockchain initiative back in 2015, intending to integrate the technology with its Azure cloud service. Since then, the project has expanded to include banking applications as well as digital identity tech through the ID2020 program.
Blockchain tech can play an especially important role in feeding the growth of Microsoft's Azure business, as it makes the service a better value. And Azure has been key to MSFT's recent success, posting year-over-year quarterly growth rates of between 90% and 120% for the past two years. Morgan Stanley recently made a forecast that Microsoft could increase its Azure revenue from $3.9 billion in 2017 to $21.6 billion as soon as 2020. Money Morning Chief Investment Strategist Keith Fitz-Gerald thinks Microsoft will be the first company to hit a $1 trillion market cap. That would put the MSFT price at about $130 a share, a 39% gain from the current price of $93.50. Microsoft also has a dividend yield of 1.8%.
- Bank of America Corp. (NYSE: BAC): It's well known that Wall Street is interested in the blockchain because of how it can streamline its back-office operations. But Bank of America stands to benefit the most from this inevitable migration. How do I know? BAC not only holds more blockchain-related patents than any other bank, it holds the most blockchain-related patents - 43 - among all U.S. companies. (Mastercard Inc. [NYSE: MA] and IBM Corp. [NYSE: IBM] are tied for second, with 27). As the tech industry has shown, owning key patents can be very lucrative.
Bank of America is otherwise a solid company, with its stock up more than 30% over the past 12 months. Looking ahead, the bank stands to benefit from the U.S. Federal Reserve's ongoing interest rate hikes as well as the recent changes to the tax code. According to FactSet, earnings per share (EPS) are expected to double by 2020. Current price: $30. BAC has a dividend yield of 1.58%.
- JD.com Inc. (NYSE: JD): This Chinese e-tailer often gets lost in the shadows of the much larger Alibaba Group Holding Ltd. (NYSE: BABA), but the lack of hype makes it a better stock to buy. Last year, JD partnered with IBM and Wal-Mart Stores Inc. (NYSE: WMT) to form the Blockchain Food Safety Alliance, a blockchain project aimed at tracking food as it moves through the supply chain. Being able to vouch for food sourcing will help JD attract business as it continues to expand.
Another reason to like JD is that it has been gaining market share - increasing to 33% as of Q2 2017, compared to just 17.7% in 2014. Quarterly revenue has been increasing by about 40% year over year. And the company just started to turn a profit, which now is expected to accelerate. On a price-to-sales basis, JD is undervalued, at just 1.01, compared to Alibaba's 12.5 and Amazon.com Inc.'s (Nasdaq: AMZN) 3.91. The current price is $40.
- IBM Corp. (NYSE: IBM): IBM's historic missteps mean it's not often mentioned among the other tech titans. But IBM is seriously embracing blockchain tech. Over the past year or so, it has quadrupled its number of blockchain employees from 400 to 1,600. It has more than 400 blockchain clients, including A.P. Moeller-Maersk AS (OTCMKTS: AMKBY), Wal-Mart, DowDuPont Inc. (NYSE: DWDP), and Visa Inc. (NYSE: V). A Juniper Research survey of 400 executives, managers, and IT leaders last year ranked IBM as the No. 1 blockchain tech leader (Microsoft was No. 2). And only Bank of America has more blockchain patents.
IBM is just starting to realize significant revenue from its blockchain initiatives. But that will ramp up dramatically over the next two years, adding between $10 billion to $18 billion to the top line. This should push the IBM stock price back up to $200 and beyond by 2020 to 2021. The current price is $157.50. The IBM dividend yield is a juicy 3.80%.
But while these are all good plays, one blockchain stock to buy stands above the rest...
This Is the Top Blockchain Stock to Buy for 2018
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.