For more than 100 years, the stock market has been one of the greatest wealth creators in the U.S. Although bonds, gold, and housing may get the upper hand on equities from time to time, no investment vehicle has delivered a higher average annual return over the long run than stocks.
Over the past decade, however, cryptocurrencies have taken the crown. For instance, popular digital currency Dogecoin (DOGE 2.56%) gained around 27,000% in just a six-month stretch between early November 2020 and early May 2021. That's a beefier return than the broad-based S&P 500 over a 56-year stretch (1965-2020), including dividends.
But despite these huge returns, Dogecoin's best days look to be in the rearview mirror.
Even taking into account its surge to begin last week, Dogecoin has declined from a peak of nearly $0.74 per token in early May to about $0.20 in less than three months. That's not a dip. That's a 73% shellacking.
There's one really good reason to ditch Dogecoin
However, poor recent performance isn't the reason investors should consider getting out of Dogecoin. The single biggest reason to sell Dogecoin right now and never look back is its complete lack of competitive advantages. There's absolutely nothing about Dogecoin that's better than other digital currencies and blockchains.
For instance, you'll often hear Dogecoin enthusiasts tout its lower transaction fees relative to the Big Two in crypto, Bitcoin and Ethereum. What you won't hear discussed is that there are more than a dozen popular digital currencies with transaction fees that are a fraction of what Dogecoin charges. In some instances, such as with Nano, there's no fee at all.
Dogecoin isn't exactly a blazing-fast network, either. Though it makes an attempt to improve on transaction validity and settlement, in relation to existing cross-border payment networks, Dogecoin's transactions take longer to settle and validate than a number of other popular tokens. In the time it takes you to read this sentence, Stellar, Ripple, and Nano have already validated and settled transactions on their respective blockchains.
Dogecoin's network isn't particularly efficient, either. It's been suggested that Dogecoin could handle a peak of 40 transactions per second, albeit it's come nowhere near this figure. Over the past month, it's been averaging fewer than 20,000 transactions daily on its blockchain (a nearly three-year low). That's about one transaction per four seconds. Comparatively, Visa is capable of 24,000 transactions per second! In 2018, Visa and Mastercard combined to handle 700 million transactions on an average day.
And did I mention that businesses have virtually no desire to accept Dogecoin? Online business directory Cryptwerk notes that only around 1,400 businesses worldwide will accept payment in Dogecoin. Keep in mind it's taken eight years just to reach this meager number.
No matter how you slice the data, the answer is always the same: Dogecoin has zero competitive edges within the crypto space. That's why it's worth dumping.
These stocks are far better investments than Dogecoin
But when one door closes, another door filled with opportunity opens in the investing space. Rather than putting your money to work in the highly volatile and unproven crypto space, the following trio of stocks all have the tools needed to run circles around Dogecoin.
First up is cloud-based customer relationship management (CRM) software provider Salesforce.com (CRM -1.66%).
For those unfamiliar with it, CRM software is used by consumer-facing businesses to access real-time client information, handle product and service issues, oversee online marketing campaigns, and provide predictive analyses and analytics. In other words, it's designed to help businesses get a better bead on their customer base and improve relationships and sales. While it's a commonly deployed solution for retailers and service-oriented businesses, we're seeing new industries and sectors, such as finance and healthcare, adopt CRM software.
Salesforce slides in as the most dominant cloud-based CRM software provider. In the first half of 2020, it accounted for 19.8% of all global CRM revenue, which was more than its four closest competitors combined. Under CEO Marc Benioff's leadership, Salesforce has been able to grow organically, and via multiple acquisitions.
On July 21, the company closed its latest deal, a cash-and-stock buyout of cloud-based enterprise communications company Slack Technologies. Though Salesforce will benefit modestly from Slack's double-digit enterprise communications growth potential, it's really the ability to use Slack's platform as a springboard to cross-sell its CRM solutions that's more valuable.
According to Benioff, Salesforce can more than double its sales to $50 billion annually over the next five years. That's tangible growth investors can count on.
Social media up-and-comer Pinterest (PINS -2.81%) also has what it takes to leave Dogecoin eating its dust.
There's little question that the pandemic worked in Pinterest's favor. With people staying indoors, they turned to the internet and social websites for entertainment and content. For Pinterest, this led to a 37% surge in monthly active users (MAU) for full-year 2020. As of this writing on July 27, the expectation is for Pinterest to have crossed above 500 million MAUs by the end of June.
Although the company generates its highest average revenue per user (ARPU) from folks in the U.S., it's growth outside the U.S. that'll fuel sustainable sales growth of 20%-plus for a long time to come. Pinterest has the opportunity to double its international ARPU multiple times this decade, with ad pricing power likely to increase in step with the number of international users engaging with the platform on a monthly basis.
Don't discount Pinterest's potential to become a force in e-commerce, either. Since its users are willingly sharing the things, places, and services that interest them, Pinterest simply has to act as the medium to connect motivated consumers with merchants that can meet their needs. A greater utilization of video to keep users engaged, and its partnership with cloud-based e-commerce platform Shopify, should allow Pinterest to become an increasingly bigger player in online sales.
A third growth stock with the tools to completely outrun Dogecoin is China-based internet search company Baidu (BIDU 4.72%).
Whereas Alphabet's Google controls the lion's share of global internet search volume, Baidu is the unquestioned leader of the pack within China, the No. 2 country in the world by gross domestic product. Data from GlobalStats shows that, over the past year, Baidu has controlled between 66% and 80% of China's internet search volume. Just as Google commands incredible ad-pricing power on its search engine, Baidu is likely to see marketing revenue consistently jump by a double-digit percentage.
The great thing about Baidu is that the company is moving well beyond advertising revenue. CEO Robin Li is overseeing a major push into artificial intelligence (AI) and cloud services. Even though these new segments represent only around a fifth of Baidu's total sales, AI and cloud services offer considerably faster growth rates and more robust margins than ad revenue. In other words, these ancillary segments can help Baidu sustain a double-digit growth rate.
Best of all, opportunistic investors can gobble up shares of one of China's steadiest performers for less than 14 times forward-year earnings per share. That's a big-time bargain for a company that can mop the floor with Dogecoin.