1 unstoppable share to buy before Dogecoin

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Cryptocurrencies made the investment world talk in 2021, delivering returns that crushed the S&P 500. But some seasoned investors remain puzzled, as even the most popular tokens fail to gain widespread adoption by consumers as payment solutions.

Dogecoin (CRYPTO: DOGE) is one of them. Despite a 4,500% gain this year, only 1,700 (mostly obscure) businesses accept the token as a form of payment for goods and services. This number is not growing rapidly either, with only 50 new entities signing up each month. This awareness among investors may be the reason Dogecoin, which started out as a joke to poke fun at cryptomania, has fallen nearly 70% from its all-time high.

But these challenges haven’t stopped some payment giants from experimenting with cryptocurrencies. Rather than take a look at a crypto that was never meant to do more than just laugh, potential Dogecoin buyers would do well to consider another proven high-growth stock instead.

Square is a consumer finance powerhouse

If you’re looking for a fintech company that constantly pushes the boundaries of innovation, look no further than Square (NYSE: SQ). The company began its journey in the area of ​​payment hardware, where it offered e-readers to physical businesses for credit card transactions. But it has since spread to consumers and is now used by over 40 million people every month, and it doesn’t stop there.

Image source: Getty Images.

Square’s CashApp is a revolutionary all-in-one consumer credit smartphone app. It enables instant peer-to-peer money transfers and users can get a Visa debit card linked to their CashApp account; the card can be used to withdraw cash or make payments in stores.

But CashApp Investing – the brand’s equity and cryptocurrency trading platform – sets it apart from other payment technologies. The aggregation of banking, payments and investments enables the free flow of money between departments, allowing users to make timely decisions about their finances without having to move funds between multiple platforms.

Bitcoin is the key to growth, but that’s not all

One of CashApp’s main growth drivers is Bitcoin (CRYPTO: BTC). In the recent second quarter, users purchasing the cryptocurrency were responsible for $ 2.7 billion of CashApp’s $ 3.3 billion total revenue. And in the first half of this year, Bitcoin has established itself as the star of Square as a whole.

Metric

First semester 2020

First semester 2021

Growth

Square Bitcoin Income

$ 1.18 billion

$ 6.23 billion

427%

Total income square

$ 3.30 billion

$ 9.73 billion

194%

DATA SOURCE: SQUARE.

Square counts every Bitcoin sale as income, even though it only takes a small transaction fee equal to around 2%, so the gross margin is very slim in this segment. Despite $ 6.23 billion in Bitcoin revenue in the first half of the year, it only generated $ 129 million in gross profit.

However, Square generated gross profit of $ 2.1 billion in the first half of this year across its business, which is an 85% increase from the first half of 2020. So even though Bitcoin is producing now the majority of the company’s revenue, it doesn’t contribute much to Square’s revenue.

Why Square is a buy before Dogecoin

Square’s business strategy has resonated with investors, and its stock has gained nearly 2,000% over the past five years. The returns have far surpassed its biggest competitor Pay Pal, which is up about 570% over the same period.

When zoomed out to look at the big picture, Square has seen impressive growth and its transition to a profitable business is just as notable.

Metric

2017

2021 (Estimate)

TCCA

Returned

$ 2.2 billion

$ 19.1 billion

71%

Earnings (loss) per share

($ 0.17)

$ 1.89

N / A

DATA SOURCE: SQUARE, YAHOO! FINANCE. CAGR = COMPOUND ANNUAL GROWTH RATE.

Square continues to move forward. The company recently announced a $ 29 billion equity acquisition of After payment, the market leader in buy now, pay later. Square intends to integrate the consumer loan service into CashApp to add yet another dimension to its menu of offerings.

The diversity of Square’s business simply seems unattainable for a single crypto token like Dogecoin. So far, the coin has failed to justify its use by consumers and businesses, and therefore remains a mere vehicle for speculation. That’s not to say it can’t scale over time, but a company like Square is light years ahead; Additionally, Square provides investors with some exposure to the cryptocurrency industry through CashApp.

For investors who are considering Dogecoin, or who have bought it at much higher prices, it’s never too late to buy a quality stock like Square. In the long run, you might be glad you did.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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