While the “smartest” growth stock may sound too absolute a term, keep in mind that it is subjective. The smartest pick for one investor may differ from another, even if we narrow it down to growth-based returns. Also, other investors allocate different “decision-making weight” to various factors.
For some, stocks going through an intense bull market phase might be smarter contenders. In contrast, others might lean more towards stocks that might be moderately or heavily discounted and ready for the next bullish phase.
Source: Getty Images
A crypto company
Galaxy Digital Holdings (TSX:GLXY), a crypto company, might be one of the smartest stocks you can buy right now for $1,000 for several reasons. These reasons range from market forces to the stock’s own inherent strengths. Let’s take a look at the market forces first.
Bitcoin has started plateauing after reaching the six-digit mark, and where there are signs of corrections, there are also predictions about another 50% growth. Ethereum is already in a correction phase. However, the crypto market’s prospects look promising for several reasons, starting with the upcoming U.S. leadership expected to be quite crypto-friendly.
The market is also expanding globally. Crypto adoption trends are gaining traction, and this is expected to be highly beneficial for companies like Galaxy Digital, even more so than miners.
Unlike crypto miners, who focus on mining one or more coins and profiting from their price dynamics, Galaxy Digital focuses on conventional financial services using crypto. This includes asset management, access to active and passive funds, investment banking, etc.
Performance
The stock has had an exceptional run and has grown over 1,900% since its inception in 2015. It’s bullish and has grown over 190% in the last 12 months. The current bullish phase might pause as Bitcoin goes through a correction phase, but the long-term prospects look solid. At this growth phase, the stock might offer around five to eight times growth in the next five years, turning your $1,000 investment into a decent sum.
There is a low chance that the stock would experience a bullish phase similar to the phenomenal post-pandemic one when it grew by about 5,000% from slump to peak. That growth would turn your capital into a little nest egg for retirement.
Galaxy Digital has at least two more things going for it: its valuation and financials. It reported a decent net income for the first three quarters and has practically no debt. As for the valuation, the stock is trading at a price-to-earnings ratio of just 5.6, which is low, especially compared to tech stocks in general.
Foolish takeaway
This crypto and tech stock can be a phenomenal investment, assuming the positive catalysts remain and gain more traction. Crypto adoption has faced some challenges in the past, but thanks to certain technologies developing in parallel, crypto’s natural alignment with a more digital world will allow it to overcome those challenges.
