Over the long run, the stock market has proved, time and again, it's the greatest wealth creator on the planet. For instance, the benchmark S&P 500 has delivered an average annual total return, including dividends, of greater than 10% since the beginning of 1980. Keep in mind this includes the dot-com bubble, the Great Recession, and the coronavirus crash.
But in recent years, it's been cryptocurrencies that've run circles around equities. Young investors, in particular, have been drawn to the decentralized and unregulated nature of digital currencies, as well as the neck-breaking volatility that often comes with owning crypto.
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Dogecoin is flying, but you're foolish if you're buying
For much of the past week, it's cryptocurrency Dogecoin (DOGE +0.02%) that's been garnering the attention of momentum players, retail investors, and digital currency enthusiasts. As of late afternoon Friday, April 16, Dogecoin could be purchased for about $0.31 per token. For context, it began the week at $0.07, and is higher by more than 15,400% over the trailing year. That would top the gain of every single publicly traded stock over the past year.
If you're wondering why Dogecoin has been on fire, it looks to be a combination of tweets/pumping from Elon Musk, the CEO of Tesla Motors, and technical moves, which take into account volume and chart patterns.
However, the story behind Dogecoin and its real-world utility are major red flags that true investors should be aware of. For instance, two engineers created Dogecoin in 2013 in a matter of hours as a joke. The idea was to combine the two buzziest things on the internet at the time -- a Shiba Inu dog meme and the cryptocurrency craze -- into a single entity. Thus was born Dogecoin.
Dogecoin lacks substantive differentiation, relative to other digital currencies, and it has extremely limited utility. According to International Business Times via Dogecoins.com, 48 businesses accept Dogecoin. Meanwhile, online company directory Cryptwerk listed in the neighborhood of 1,200 place, stores, and services accepting Dogecoin, as of April 16.
But here's a number to keep in mind: There are more than 32 million businesses in the U.S. alone. Further, according to The Hill, there are an estimated 582 million entrepreneurs worldwide. About 1,200 of these businesses, at most, accept Dogecoin. That's how minimal the utility is.
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This trio of stocks make for much smarter investments than Dogecoin
Rather than throwing your hard-earned money at a pump-and-dump asset like Dogecoin, consider putting your money to work in the following three much smarter buys.
Salesforce.com
A considerably smarter way of putting your money to work right now would be to buy shares of cloud-based customer relationship management (CRM) software provider salesforce.com (CRM +1.81%). Despite its megacap size ($214 billion market cap), it offers sustainable sales growth of 20% or higher for the next half-decade, if not longer.
For those unfamiliar, CRM software is used by consumer-facing businesses to handle tasks like logging customer information and overseeing service or product issues. It's also handy when managing online marketing campaigns and as a predictive tool for suggesting new products and services to existing clients based on their buying history or other metrics. CRM software makes a lot of sense for the retail and service industries, but is finding plenty of momentum in nontraditional places, such as banks and hospitals.
What makes salesforce such a beast is the company's utter dominance of global CRM revenue. In the first half of 2020, IDC estimated that salesforce controlled just shy of 20% of global CRM revenue. That was more than No.'s 2 through 5 on its global share list, combined. This makes salesforce the logical go-to for big businesses looking to incorporate CRM software.
Salesforce is also in the process of acquiring enterprise-focused communications platform Slack Technologies in a cash-and-stock deal that was valued at $27.7 billion when it was announced. If this deal closes, salesforce will be able to use Slack's platform as a jumping-off point to cross-sell to smaller businesses. This'll be its key to reaching $50 billion in annual sales in five years.
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Jushi Holdings
Marijuana stocks are arguably one of the most overcrowded trades at the moment -- and for good reason. According to New Frontier Data, weed sales in the U.S. are expected to grow by 21% annually between 2019 and 2025, ultimately hitting $41.5 billion by mid-decade. One of the smartest ways to take advantage of this growth is with small-cap multistate operator (MSO) Jushi Holdings (JUSHF +4.25%).
Jushi's growth strategy is a bit different from most MSOs. Instead of trying to plant its proverbial flag in as many states as possible, Jushi is focusing most of its effort in three states: Pennsylvania, Illinois, and Virginia. The common theme is that all three states limit how they assign retail licenses. Pennsylvania and Illinois cap the number of allowable retail stores, while Virginia assigns dispensary licenses by jurisdiction. Put another way, 80% or more of Jushi's revenue will come from markets where competition will be limited or nonexistent. It's a smart strategy that'll allow Jushi to effectively build up its brand and gain a following.
Despite its small size, Jushi has not been afraid to go shopping. It's acquired assets in Pennsylvania and Virginia to expand its presence in these core states, and has used acquisitions to gain a footprint in the California and Nevada markets. California is the largest cannabis market in the world by annual sales, while Nevada is expected to lead the nation in cannabis spending per capita by 2024.
As one final note, roughly $45 million of the first $250 million in capital raised by the company came from insiders and executives. When the interests (and wallets) of execs line up with their shareholders, good things tend to happen.
Image source: Pinterest.
A third stock that's a considerably smarter buy than Dogecoin is social media up-and-comer Pinterest (PINS +1.29%).
To state the obvious, Pinterest had a great 2020. With the pandemic keeping people in their homes, many turned to social sites for engagement. This included Pinterest, which picked up a net of 124 million monthly active users (MAU) last year. But understand that Pinterest was wooing new MAUs long before the pandemic struck. In the three years preceding the pandemic, net MAU growth averaged 30%, compared to the 37% MAU growth recorded in 2020.
What's notable about the users Pinterest is attracting is that they're predominantly from international markets. More than 90% of the 124 million net MAUs gained in 2020 were from outside the United States. On one hand, average revenue per user (ARPU) is considerably lower outside the U.S., meaning Pinterest isn't generating a lot of revenue from the new users it's picking up. However, it also gives the company ample opportunity to grow its international ARPU significantly this decade. As more international users sign up, ad dollars will climb to reach these users.
Best of all, we're witnessing the early stages of what could be an absolute e-commerce giant. Think about it this way: Pinterest's user base is willingly sharing the things, places, and services that interest them. This makes Pinterest one of the most-targeted platforms on the planet for merchants that can meet these interests. As long as Pinterest can keep its user base engaged, it should have no problem generating huge returns over the long run for investors.
