With the price of bitcoin continuing to thrill and chill in pretty much equal measure, investors may be looking for another way to participate in cryptocurrencies now that the sector is gaining more prominence and legitimacy. To that end, here are a couple of Canadian crypto picks, both of which come with Buy ratings.
First up is Voyager Digital (Voyager Digital Stock Quote, Charts, News, Analysts, Financials CSE:VOYG), a digital assets fintech company which has a mobile app allowing users to buy and sell cryptocurrencies along with earn interest on cryptocurrency deposits.
Recently up-listed to the TSX from the CSE, Voyager is operational in 49 states in the US with operations in New York pending. The company began in 2018, is based in NYC and currently has assets under management of over $3.3 billion with over 660,000 total funded accounts. Voyager has grown both organically and inorganically through four acquisitions to date: wallet company Ethos in 2019, retail digital asset business Circle Invest in 2020, a merger with French crypto exchange LGO in 2020 and, announced in August, the acquisition of Danish digital currency payment platform Coinify.
Along with its crypto investment platform, Voyager is planning on releasing a crypto-backed debit card, a desktop version of their platform and a full-service online broker dealer for trading traditional equities, options and futures. The company last reported quarterly earnings in July where its preliminary fiscal fourth quarter 2021 numbers featured revenue expected between $103 and $107 million. (All figures in US dollars except where noted otherwise.)
Voyager’s share price has dropped 20 per cent since its debut on the TSX earlier this month, but Eight Capital analyst Adhir Kadve sees lots of promise in the name, where he initiated coverage on VYGR in July with a “Buy” rating and C$31 target.
Kadve said digital assets are still a nascent but emerging class where overall trading volumes for crypto, even during the sector’s bull run over the first half of this year, were still five times lower than those for US equities and 9x lower than the US fixed income asset class.
But Kadve likes Voyager’s zero-commission trading platform and pointed out that lots of other folks do as well, saying it has broad-based support of an industry-leading 60+ cryptocurrencies. Coupled with the company’s exemplary growth and strong product roadmap, owning Voyager is a useful alternative for investors to gain exposure to cryptocurrencies, according to Kadve.
“Voyager Digital is a digital asset focused agency broker that is early days in building a one-stop financial services platform based on cryptocurrencies and is led by an experienced management team with a track record of success in nascent up and coming industries,” Kadve wrote in his coverage initiation on July 28.
“We see the [up-listing to the TSX] as a near- term catalysts for the stock and a well-defined user acquisition strategy based on increased marketing spend, product rollouts, platform enhancements and geographic expansion as avenues for revenue growth,” he wrote.
In an August 8 update to clients, Kadve estimated that VYGR was currently trading at 4x calendar 2022 EV/Revenue, which represented a significant discount to industry bellwether Coinbase at about 9x.
“We believe continued user growth and execution in building out its platform will lead to a narrower discount to COIN,” Kadve wrote in an August 3 update.
At the time of his August update, Kadve’s maintained C$31.00 target represented a projected one-year return of 83.4 per cent.
Another crypto-brokerage name to watch is Vancouver’s BIGG Digital Assets (BIGG Digital Assets Stock Quote, Charts, News, Analysts, Financials TSX:BIGG CSE:BIGG), which had a big run-up earlier this year and has now fallen off almost as sharply, although the stock is still at about a double for the year-to-date.
BIGG Digital has two subsidiaries in Netcoins, an online brokerage, and Blockchain Intelligence Group, a developer of cryptocurrency compliance, search and forensics security and accountability software.
The company’s Netcoins business is growing by leaps and bounds, delivering approx. $4.16 million in gross revenue for the company’s latest quarter, BIGG’s second quarter 2021, delivered in late August. That represented a 24 per cent sequential growth rate and outwards of 2000 per cent growth year-over-year for the business.
Covering at the company, PI Financial analyst Kris Thompson said Netcoins, which currently has only six coins available for trading, could see higher volumes with the addition of new cryptocurrencies to its platform.
“Coinbase had 83 in Q2 and generated 50 per cent of dollar volume traded from coins other than BTC and ETH. Coinberry just days ago received the first open-loop crypto trading platform license in Canada and now has 19 coins available,” Thompson wrote.
Even with the gains already this year, Thompson sees more upside to BIGG. With his August 25 update, the analyst reiterated his “Buy” rating and C$3.00 target, which at press time represented a projected one-year return of 132.6 per cent.
“Investors need to think past the quarterly volatility associated with crypto and view BIGG as one of the top two to three platforms in Canada once the regulatory landscape and sector consolidation shakes out. Then we can better judge the valuation, which is likely much higher than $3/share,” he said.