In financial markets “the hardest thing to judge is what level of risk is safe” for you. These words, from famous billionaire investor George Soros, are probably true for investors who are betting heavily on the Bitcoin future.
The so-called digital gold has climbed about 500% alone this year to $5,700 due to a buying frenzy which mimics the classical herd mentality in the market.
But without going into the merits and demerits of this digital currency, which offers an alternative method of payment that bypasses the traditional banking system, one thing is clear: it is tough for investors in Bitcoin to manage their risk prudently when they have no way to value this asset.
Many top financial minds call Bitcoin a “fraud,’ “an index of money laundering,” and “an Enron in the making.”
Investors should also be cognizant of the fact that Bitcoin does not produce any cash flows other than the terminal value one is likely to receive at the time of sale.
If you are looking for assets that have the potential to produce explosive growth, then I have better options for you to consider than this highly speculative asset class.
In Canada, Shopify Inc. (TSX: SHOP)(NYSE:SHOP) and Dollarama Inc. (TSX: DOL) stocks are among the top momentum stocks with bright earnings outlooks. Here is why.
Shopify stock has soared 130% this year, as this e-commerce software company grows globally.
Shopify has stickiness in its business model. Once you have set up your e-commerce store on Shopify’s platform, it would be tough to move to another vendor. Its software makes building your online shop much easier, allowing small businesses to sell products through the internet without having to be experts. The company also provides payment solutions and hassle-free back-office support
If you understand the growth cycle of a technology company and believe in the power of Shopify’s platform, then this is a great investment with huge upside potential for your growth portfolio.
Dollarama Inc. (TSX: DOL), Canada’s largest owner and operator of dollar stores, is standing strong, despite the demise of many big retail companies in Canada. Its stock has more than doubled in the past five years at a time when we saw the collapse of Target Canada and, more recently, Sears Canada Inc.
The reason of its success is that the company has built its business model by targeting the middle class, which has become very price conscious amid slowing income growth.
Dollarama’s earnings have surprised almost every year since its initial public offering in October 2009. Despite its supersized gains in the past eight years, I think Dollarama is still a great growth stock to hold as a long-term investment.
The bottom line
By investing in top-class growth stocks, you can better manage your risks. These companies have sound business models backed by tangible assets. I think these investments are better than investing in Bitcoin, where it is hard to quantify the level of risks you are taking.
