Many tech stocks were hammered in early 2022, but the company is doing better than ever. Cryptocurrencies have also had difficult months, with Bitcoin (CRYPTO: BTC) more than 35% drop from its all-time high. With the good deals popping up left and right, many investors may be wondering where to put the money.
If an investor decides between high quality stocks and a cryptocurrency to buy on the downside, they might want to consider these three stocks against any cryptocurrency. Businesses have been hit hard, but every business is still operationally strong. Investments in these companies are much less speculative than any sort of cryptocurrency. Here is why i think Holdings reached (NASDAQ: UPST), DigitalOcean Holdings (NYSE: DOCN), and Unity software (NYSE: U) would be better investments for the next decade than any cryptocurrency.
Upstart has fallen almost 70% from its historic high, which can be painful for any investor. But it’s important to recognize that nothing has fundamentally changed with the business, and the stock could have an extremely bright future over the next decade, potentially surpassing its old all-time highs.
Upstart is disrupting the traditional loan determination system by using artificial intelligence (AI) to analyze more than 1,000 variables. Instead of basing a loan decision on a FICO score (which can often be inaccurate when it comes to people with lower credit scores), the platform looks at hundreds of other potentially more accurate entries. In an internal study, Upstart found that its AI can approve 173% more people than traditional banks while still maintaining the same rate of loss. With such a precise platform, its determinations gained popularity with small banks across the country.
The total number of Upstart customers is still small, but growing like wildfire. The company had only 31 banking partners at the end of the third quarter of 2021. These partners have generated more than 363,000 loans, for a total loan volume of $ 3.1 billion, or 244% more than previously. one year, which resulted in a 250% growth in turnover. year after year in the third quarter.
The company is also profitable, generating GAAP net income of $ 29 million in the third quarter, up 199% year-over-year. This impressive ability to grow extremely quickly while still being profitable is almost unheard of in growing businesses, especially those growing at triple-digit rates. As a result, the company is trading at 17 times sales, which is high, but the lowest since its IPO in December 2020.
Upstart is disrupting much of the financial system and has been successful so far. While this is a risky bet for the next decade, the company’s impressive performance could give it far more credibility than any cryptocurrency. And if it is successful, the potential for growth is hugely significant – which is why I would invest in it before I even think about crypto.
2. Digital ocean
Like Upstart, DigitalOcean has been crushed of late, falling 12% in 2022 alone. But the company is enjoying resounding success in the cloud space, focusing on cloud services for small and medium businesses (SMBs). ). He created a simple, transparent and easy-to-use SMB platform that big cloud providers love. Amazon‘s (NASDAQ: AMZN) AWS failed to replicate.
The SMB cloud space is expected to grow into a $ 116 billion market by 2024. DigitalOcean dominates the cloud space, with nearly 600,000 customers who have generated more than $ 455 million in annual recurring revenue for the business . DigitalOcean is also almost at breakeven in terms of profitability. In the third quarter of 2021, it lost just $ 1.9 million, which is less than 2% of third-quarter revenue. With over $ 29 million in free cash flow so far this year, its net loss is not a major concern.
Large tech companies are primarily focused on enterprise customers, so AWS or Microsoft‘s (NASDAQ: MSFT) Azure is outside their domain when it comes to SMBs. Plus, the space just isn’t big enough to make these multi-billion dollar companies worth it, allowing smaller companies like DigitalOcean to soak up the entire market. At 16 times sales, it’s an attractive buy today, with a large market and a set record that gives me confidence that the company could dominate this niche over the next decade.
In the aftermath, Unity’s shares were also broken recently. Shares peaked in late November, but have slumped 40% since then. Still, the company hasn’t lost any major customers and remains one of the most dominant places for developers to create, operate, and monetize their video games.
The company saw significant growth in its most recent quarter, increasing its revenue by 43% year-over-year to $ 286 million. Unity has also enhanced its monetization solutions through a partnership with Meta-platforms (NASDAQ: FB). While its net losses are significant – the company lost $ 115 million in the third quarter of 2021 – they have been declining. In the quarter of last year, the company lost $ 142 million, so its loss of just $ 115 is a big improvement. With his leadership in a rapidly growing field, I expect this net loss to continue to follow the right direction over the next several years.
The deal gives developers access to a new range of advertisers, thereby maximizing the monetization of their games. This partnership will make Unity game developers happier and more willing to work on Unity, which will likely result in higher retention of its developers.
Although Unity is more expensive than Upstart and DigitalOcean, it is still a much better potential investment than cryptocurrency. Unity is trading at 33 times sales, but deserves its high premium. It’s a leader, with over 1.5 million active developers. In addition, the company has contributed to the development of one of the most popular games in the world, Among us.
With such success, Unity could continue to grow with the gaming industry, which is one of the fastest growing media categories, with a value of over $ 159 billion. Not only does Unity have a more robust business than many cryptocurrencies, but its potential is extremely large as well. Ultimately, this combination makes it a much safer choice than Dogecoin (CRYPTO: DOGE) or most other cryptos in my opinion.
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 motley! Challenging 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.