Galaxy Digital Holdings Is a Top Stock to Buy Right Now, But Only if You Believe This 1 Thing

The right crypto stock can be a powerful buy right now, but only if significant cryptocurrencies keep going up or remain stable for the next few months.

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cryptocurrency, crypto, blockchain

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The crypto industry is on the mend, and most major cryptocurrencies are rising again. The optimism around crypto assets isn’t limited to cryptocurrencies, however, and has already seeped into crypto stocks, including Galaxy Digital Holdings (TSX:GLXY).

It’s one of the most promising crypto stocks you can buy right now, assuming the underlying crypto assets remain vital for the next few months, ideally till next year.

The company

Galaxy Digital is one of the largest publicly traded crypto companies in Canada. Ironically, it’s not a pure-play crypto miner, which is the norm for the crypto sector in Canada. This $5.4 billion market cap crypto company has a diversified business model and markets itself as a blockchain leader, elevating it above typical crypto stocks.

Its three primary businesses are global markets, asset management, and digital infrastructure, all relying on crypto assets. The company is positioning itself as an early bird in a crypto-based economy and has already grown to a decent size. It has over $10.1 billion worth of assets under management and trading arrangements, with about 1,052 financial institutions using over a hundred cryptocurrencies.

Three reasons to buy Galaxy Digital right now

The most compelling reason to buy Galaxy Digital right now is its current bull market phase. In less than six months, it has risen by about 240%, which is impressive even for a tech stock. This robust growth phase far outstrips the growth of the underlying crypto assets, primarily Bitcoin and Ethereum.

The second reason to buy Galaxy Digital is that despite its rapid growth, the stock is still undervalued, with a price-to-earnings ratio of just 3.2. The company has virtually no debt, and its net income is growing at an incredible pace on a quarterly basis. The healthy financials, coupled with a reasonable valuation, make a compelling case for Galaxy Digital as a long-term holding.

The third reason is the company’s business model and diversified operations. It doesn’t offer its investors direct exposure to crypto assets like miners do, but that might make it safer and more resilient during weak crypto markets. Also, considering the fact that it offers better returns than most crypto miners once crypto assets start surging, you may get the best of both worlds with this crypto stock.

Foolish takeaway

It’s important to understand that while the business model does make Galaxy Digital more resilient than miners that have direct exposure to the rise and fall of crypto assets, it’s not perfectly immune.

Most of its appeal and return potential are tied to a healthy crypto market, so if you are sure that it will remain healthy for a long enough period, Galaxy Digital is a top stock for you to buy. But if the current momentum has or is close to running its entire course, it pays to be cautious.

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.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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