Please ensure Javascript is enabled for purposes of website accessibility

Dogecoin's Biggest Weakness Is the Greatest Strength for These 2 Stocks

By Keith Speights - Updated May 14, 2021 at 10:07AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

And it could make a huge difference over the long run.

Elon Musk's guest spot on Saturday Night Live didn't give Dogecoin (DOGE -0.46%) fans the result they expected. Instead of soaring after the multibillionaire and self-proclaimed "Dogefather" hosted the late-night TV show, Dogecoin's price sank. In the "Weekend Update" mock news part of SNL, Musk even admitted that Dogecoin is "a hustle."

But having a prominent supporter fail to boost the price isn't the biggest weakness for Dogecoin. There's another key issue for the popular cryptocurrency. And Dogecoin's biggest weakness is arguably the greatest strength for Intuitive Surgical (ISRG -0.49%) and Vertex Pharmaceuticals (VRTX 2.06%).

Sleeping Shiba Inu

Image source: Getty Images.

Biggest weakness, greatest strength

So what is Dogecoin's biggest weakness? Warren Buffett might argue that it doesn't produce anything. However, there are several types of assets that belong in that category, yet investors still buy them. I think that Dogecoin's biggest weakness is that it doesn't have something else that Buffett looks for -- a moat.

Just as a medieval castle had a moat to protect it against invaders, the Oracle of Omaha prefers that anything he invests in has strong competitive advantages that help fend off rivals. Dogecoin does have low transaction fees and fast transaction speeds. However, those pluses by themselves aren't enough to prevent another cryptocurrency from dominating.

It's a different story with Intuitive Surgical and Vertex. Intuitive pioneered robotic surgical systems and stands as the 800-pound gorilla in its market. Vertex enjoys a monopoly in treating the underlying cause of rare genetic disease cystic fibrosis (CF).

The market dominance that Intuitive and Vertex have established won't be easily overcome. However, Dogecoin's success depends largely on public acceptance, which can be fleeting, especially with so many other cryptocurrencies vying for attention.

Much different dynamics

Both Intuitive and Vertex face rivals, as well. However, the competitive dynamics for the companies are much different than what Dogecoin is going up against.

Healthcare giants Johnson & Johnson and Medtronic hope to achieve success in the robotic surgical-systems market. While the big companies could carve out a niche for themselves, dethroning Intuitive is likely to be extremely difficult.

More than 6,100 of Intuitive's da Vinci systems are in use worldwide, and well over 8.5 million procedures have been performed using its robotic surgical systems. More than 24,000 peer-reviewed articles have been published about its technology, including over 3,000 articles in 2020 alone. The bottom line is that Intuitive claims a long track record and huge installed base that gives it a strong moat.

Other companies are developing drugs that target the underlying cause of CF as Vertex's four approved drugs already do. However, the most advanced of these potential rival therapies are only in phase 2 testing. These experimental drugs are at best a few years away from even possibly threatening Vertex's franchise, and the company thinks that it will command a leading market share in CF through the 2030s.

Dogecoin's potential edge 

There's one major potential edge that Dogecoin has over Intuitive Surgical and Vertex Pharmaceuticals: The cryptocurrency could make a person rich quickly. Even with the steep declines over the last several days, Dogecoin is still up well over 7,000% year to date. Intuitive's shares are barely in the black so far this year, while Vertex's shares are in negative territory.

However, that edge can cut both ways. Dogecoin can lose a lot of money quickly. Investing in any cryptocurrency isn't for the faint-hearted.

Don't be surprised if Intuitive Surgical and Vertex outperform Dogecoin in the years to come. Over the long term, moats matter. 

Keith Speights owns shares of Intuitive Surgical and Vertex Pharmaceuticals. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool recommends Johnson & Johnson and Vertex Pharmaceuticals and recommends the following options: long January 2022 $580 calls on Intuitive Surgical and short January 2022 $600 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$293.95 (2.06%) $5.92
Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
$239.13 (-0.49%) $-1.19
Johnson & Johnson Stock Quote
Johnson & Johnson
$170.20 (-0.53%) $0.91
Medtronic plc Stock Quote
Medtronic plc
$93.58 (0.32%) $0.30
Dogecoin Stock Quote
$0.07 (-0.46%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.