Forget Dogecoin: This Top Canadian Stock Turned $10,000 Into $450,000!

Dogecoin, Bitcoin, and other cryptocurrencies are taking a hit. Here’s one top Canadian stock that might be a good alternative investment for your crypto profits.

| More on:
Growth from coins

Image source: Getty Images

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

Dogecoin and Bitcoin plunged in recent days, as crypto investors booked profits and ran for the hills after Elon Musk suddenly changed his tune on the crypto market.

Why did Dogecoin crash?

Dogecoin is a perfect example of why investors should be careful chasing hot trends. The cryptocurrency, which started out as a joke a few years ago to poke fun at Bitcoin, soared in recent months, as speculators chased quick gains. A look at the Dogecoin chart shows the craziness of the mania. Dogecoin’s value rose from less than a penny at the start of the year to above US$0.70, making some people suddenly rich.

Elon Musk and other business celebrities helped fuel the interest, but the billionaire just reversed his enthusiasm. Musk called dogecoin a “hustle” in a TV appearance. More importantly, he recently said Tesla would stop accepting Bitcoin as payment for its cars due to rising concerns that Bitcoin mining is not environmentally friendly. The announcement sent Bitcoin and other cryptocurrencies into a steep decline, highlighting the risks of speculating in the sector.

Cryptocurrencies still trade at very high levels. Investors who are sitting on profits might want to cash out and look to put the money in other opportunities.

Why Canadian National Railway is a top Canadian stock to buy

Canadian National Railway (TSX:CNR)(NYSE:CNI) might not be as exciting as cryptocurrencies, but the returns the company has delivered for investors make it a rock star. The railway enjoys a wide competitive moat along its existing network, which connects ports on the Pacific and Atlantic in Canada with the Gulf Coast in the United States.

CN is an integral part of the smooth functioning of the Canadian and U.S. economies and stands to benefit as the post-pandemic recovery kicks into gear.

The railway invests billions of dollars every year on locomotives, rail cars, and network upgrades to ensure it meets rising demand for its services and operates efficiently. Although the capital program is large, CN still has ample free cash flow to give investors attractive dividend hikes and buy back shares. CN’s board raised the payout by 7% for 2021.

CN’s share price recently pulled back on news that it has made a bid to buy Kansas City Southern, a U.S. railway with lines that connect to Mexico. The market is concerned the US$33.7 billion value of the offer, which is much higher than the rival bid from Canadian Pacific Railway, might be too high. In addition, a bidding war and the anticipated drawn-out regulatory reviews could distract management.

At the time of writing, CN trades for close to $135 per share compared to $148 last month. The acquisition distractions are valid near-term concerns, but the drop in the share price appears overdone, and the stock looks undervalued when you consider the big picture.

Long-term investors have done well with CN. A $10,000 investment in the stock when the company went public 25 years ago would be worth more than $450,000 today with the dividends reinvested.

The bottom line

Dogecoin, Bitcoin, and other cryptocurrencies carry significant risk. Some pundits still say they will eventually be worthless. Investing in stocks also carries risk, but buying established industry leaders like CN that have wide moats and strong track records of profit growth tends to pay off over the long haul.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

David Gardner owns shares of Canadian National Railway and Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Canadian National Railway and Tesla. The Motley Fool recommends Canadian National Railway. Fool contributor Andrew Walker owns shares of CN.

More on Investing

edit Sale sign, value, discount
Investing

3 Cheap TSX Stocks to Buy Before July

Canadian markets have bounced back, but investors can still snag undervalued TSX stocks like Finning International Inc. (TSX:FTT).

Read more »

thinking
Investing

Is Blackline (TSX:BLN) Stock Worth Your Attention in 2022?

Blackline Safety Corp. (TSX:BLN) stock has struggled in the year-over-year period, but there are some positives to glean from its…

Read more »

stock analysis
Investing

Why I’m Buying the Dip in Andlauer (TSX:AND) Stock

Andlauer Healthcare Group Inc. (TSX:AND) stock offered exposure to two promising spaces while offering solid value in late June.

Read more »

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

data analyze research
Energy Stocks

TSX Stock Picks With Huge Potential

If you want a TSX stock that's bound for even more strong growth, these three are top picks by analysts.

Read more »

growing plant shoots on stacked coins
Investing

Market Plunge: Double Your Cash With 3 Bargain Stocks

These TSX stocks have corrected over 50%, despite their strong fundamentals, and could easily double from here.

Read more »

oil and natural gas
Energy Stocks

Can Cenovus Stock Outperform in H2 2022?

Is now the time for investors in Cenovus (TSX:CVE)(NYSE:CVE) stock to buy more, or wait out this volatility right now?

Read more »

cup of cappuccino with a sad face
Investing

The Biggest Regret a TSX Investor Can Have

Hydro One (TSX:H) is a top bond proxy to own if you're a TSX investor who's worried about a pick-up…

Read more »